Japan’s Nikkei 225 hit a new record high Wednesday, with Yokohama Rubber up 10%, Renesas Electronics rising 7%, and Tokyo Electric Power gaining 5.26%.
Major indices had a strong session on Tuesday, with the S&P 500 rising 1.1% to 6,446 and Nasdaq gaining 1.4% to 21,682. The Dow added 483 points to 44,459. The Russell 2000 surged nearly 3% as small-caps benefit from potential lower borrowing rates.
Markets rallied on better-than-expected inflation data, easing concerns about tariff-driven price increases. The market now sees a 95% probability of a September Fed rate cut, according to the CME’s FedWatch Tool. Thursday’s producer price index will provide additional economic insights before the Fed’s Jackson Hole meeting next week.
Inflation rose less than expected in July as President Donald Trump’s tariffs showed modest impacts, boosting investor confidence about rate cuts. The consumer price index increased 0.2% monthly and 2.7% annually, below Dow Jones estimates of 2.8% yearly growth. Core CPI rose 0.3% monthly and 3.1% annually, matching monthly but exceeding annual forecasts.
Cryptocurrencies rallied Tuesday, led by ether nearing its all-time high. Markets climbed following the CPI release, boosting investor hopes for a September Fed rate cut. Ether rose 8.9% surpassing $4,600 levels. $4,579, its highest since December 2021 nearing its November 2021 record of $4,866.
The key question remains whether tariffs will cause temporary or lasting inflation. Market pricing strongly indicates a September rate cut, with October reduction odds now at 66%.
The Dollar index (DXY) fell 0.47% to 98.00, following inflation numbers as rate cut expectations weigh on the greenback. EURUSD gained 0.51% to 1.1676, and GBPUSD broke above 1.3500 after rising 0.5% in yesterday’s session.
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