Global Markets Rally as U.S. Stocks Reach New Highs Amid Inflation Data

Global markets experienced significant gains after U.S. stock indices reached new record highs, propelled by moderate inflation data and growing expectations of Federal Reserve interest rate cuts.

In the U.S., the S&P 500 rose 1.1% to close at 6,445.76, while the Dow Jones Industrial Average increased by 1.1% to 44,458.61. The Nasdaq Composite also climbed 1.4%, reaching a new high of 21,681.90.

The Bureau of Labor Statistics reported that the Consumer Price Index (CPI) increased by 2.7% in July compared to the previous year, aligning with June's rate and slightly below economists' expectations of 2.8%. Core CPI, which excludes food and energy prices, rose by 3.1% over the same period, marking the highest level since February.

These inflation figures have bolstered investor confidence that the Federal Reserve may consider cutting interest rates in its upcoming September meeting. Lower rates could stimulate economic growth by reducing borrowing costs for consumers and businesses.

European markets mirrored this optimism, with Germany's DAX rising 0.8% to 24,207.78, France's CAC 40 increasing by 0.4% to 7,784.63, and the UK's FTSE 100 edging up 0.1% to 9,157.26.

Asian markets also responded positively. Japan's Nikkei 225 gained 1.3% to 43,274.67, Hong Kong's Hang Seng surged 2.6% to 25,613.67, and China's Shanghai Composite added 0.5% to 3,683.46.

The extended truce in the U.S.-China trade dispute has further contributed to market optimism, providing relief to companies and economies reliant on global supply chains.

In the energy sector, U.S. benchmark crude oil prices declined by 26 cents to $62.91 per barrel, while Brent crude fell by 20 cents to $65.92 per barrel.

Currency markets saw the U.S. dollar weaken against the Japanese yen, falling to 147.24 yen from 147.84 yen. The euro strengthened, climbing to $1.1727 from $1.1677.