Decelerating US inflation data weighs on dollar, drives stocks worldwide
ALBAWABA – Stocks worldwide surged on Wednesday after slower-than-expected US inflation data came in, supporting anticipation that the United States (US) Federal Reserve (Fed) is done hiking US interest rates, at least for now.
Gold prices were up $5.54 on the ounce, or 0.28 percent, by Wednesday 10 a.m. Amman time, as per GoldPrice.org, at $1,968.19.
News of slowing US inflation boosted demand for both risk assets and safe havens, apart from the US dollar itself and treasuries, driving oil and gold prices globally.
Stocks worldwide fuelled by prospects of economic reprieve
According to Agence France-Presse (AFP), some traders and investors even expect rate cuts early in the new year, with Wall Street running strong and Asian markets extending the global rally.
"The fact that the US Fed seems to be done with rates and inflation is behind us for now is definitely a positive for all risky assets," Pooja Malik, of Nipun Capital, told Bloomberg Television.
However, she warned of the possibility of more volatility over the next 12-18 months.
Stocks worldwide and gold prices both responded positively to slowing US inflation data - Shutterstock
The US dollar and treasury yields both sank on slowing US inflation data, as markets priced the end of the monetary tightening cycle.
The consumer price index, a main gauge of inflation, decelerated to 3.3 percent in October, down from 3.7 percent in September and 0.1 percent below forecasts. Core US inflation, also a prominent index of inflation, was also below expectations, as reported by AFP.
Tech giants bolstered Hong Kong more than two percent higher, Tokyo added two percent, while Sydney, Seoul, Wellington, Taipei and Jakarta were all up more than one percent.
Shanghai, Singapore and Manila also ticked higher.
US dollar slipping boosts stocks worldwide, gold prices
The US dollar remained under pressure, having dropped against its major peers, though the yen's rally was tempered by news that Japan's economy shrank more than forecast in the third quarter.
Overall, the greenback was down two percent against the South Korean won, Australian dollar and South African rand. The US dollar was well off against the Mexican peso, Canadian dollar, Thai baht and Chinese yuan, AFP reported early today.
Contrarily, the Bloomberg US Dollar Spot Index showed the greenback picking up 0.10 percent since closing at its lowest in months last night.
MSCI Inc.’s Asia Pacific Index jumped about 2 percent, with all markets in the green. Futures for US stocks also advanced after the S&P 500 climbed the most since April, according to Bloomberg.
South Korea’s won led gains among Asian currencies and the offshore yuan strengthened to its highest since August.
Market Summary and Stocks Worldwide by AFP and Bloomberg
Tokyo - Nikkei 225: UP 2.0 percent at 33,341.56 (break)
Hong Kong - Hang Seng Index: UP 2.4 percent at 17,811.09
Shanghai - Composite: UP 0.5 percent at 3,070.56
Dollar/yen: UP at 150.54 from 150.37 yen on Tuesday
Pound/dollar: DOWN at $1.2486 from $1.2496
Euro/dollar: DOWN at $1.0874 from $1.0880
Euro/pound: UP at 87.08 pence from 87.05 pence
New York - Dow: UP 1.4 percent at 34,827.70 (close)
London - FTSE 100: UP 0.2 percent at 7,440.47 (close)
S&P 500 futures rose 0.2 percent as of 1:38 p.m. Tokyo time. The S&P 500 rose 1.9 percent
Nasdaq 100 futures rose 0.3 percent. The Nasdaq 100 rose 2.1 percent
Japan’s Topix rose 1.1 percent
Australia’s S&P/ASX 200 rose 1.4 percent
Hong Kong’s Hang Seng rose 2.8 percent
The Shanghai Composite rose 0.5 percent
Euro Stoxx 50 futures were little changed
Bitcoin fell 0.2 percent to $35,503.13
Ether fell 0.2 percent to $1,977.73
The yield on 10-year Treasuries declined two basis points to 4.43 percent
Japan’s 10-year yield declined 7.5 basis points to 0.775 percent
Australia’s 10-year yield declined 15 basis points to 4.51 percent
