Moving markets today: Asian stocks surge on US Fed rate cut optimism, gold rally continues; focus on UK and euro area CPI
Wall Street stocks rose and the Dow Jones Industrial Average hit an all-time closing high on Tuesday after US retail sales data supported the view that the Federal Reserve is approaching its easing cycle, reining in inflation while avoiding a recession. Gold extended a recent rally to hit a new record high as investors buy up the metal traditionally used as a hedge against inflation and uncertainty. Prices for bitcoin have also rallied in the days following an assassination attempt on Trump that increased his perceived odds of winning November’s election. Asian equities rose, joining a global stock rally as bets the Federal Reserve will soon start cutting rates fueled a rush into riskier corners of the market. Oil prices steady as slowing demand offsets tightening supply. Gold hits record high on US rate cut bets. New UK government to set out plans in state opening of parliament. New Zealand Q2 CPI rises 0.4 per cent on-quarter, below expectations. The market spotlight in the middle of the week will shift back towards the UK and the release of the consumer price report for the month of June.
Here are five key takeaways for your day.
UK government to outline plans in parliament’s state opening
Today, the newly appointed Prime Minister of Britain, Keir Starmer, will introduce his initial batch of proposed legislation.
These laws are designed to fulfil his commitment to revitalizing the nation after a period marked by economic stagnation and political turbulence.
The package encompasses over 35 bills that prioritize economic growth, aiming to streamline home construction processes, expedite major infrastructure projects, enhance transportation networks, and stimulate job creation.
The King’s Speech, a ceremonial event where the government’s agenda is presented by the monarch in parliament, is scheduled for 1030 GMT and is renowned for its formal traditions and ceremonial grandeur.
New Zealand Q2 CPI rises 0.4 per cent, falls below predictions
In the second quarter, inflation in New Zealand slowed significantly, reaching its lowest point in three years.
This brought it close to the target range set by the country’s central bank, which has sparked expectations that interest rates could be lowered later this year.
Annual inflation dropped to 3.3 per cent from 4.0 per cent in the previous quarter, slightly below the anticipated 3.4 per cent forecasted by economists.
As a result of this softer inflation data, New Zealand’s stock market saw a boost, with shares hitting their highest level in over two years on Wednesday.
Trump vows to keep Fed chair Powell until 2026
Donald Trump announced he won’t remove Federal Reserve Chair Jay Powell before his term ends in 2026, easing concerns about potential disruptions in the central bank’s leadership. In an interview with Bloomberg on Tuesday, Trump confirmed Powell would serve his full term.
What’s on the radar
This morning, before the market opens, investors will be closely watching the UK consumer and producer price data as the Bank of England approaches its next monetary policy decision.
In China, the Third Plenum is the key event this week, running from Monday to Thursday in Beijing.
In the US, the second-quarter earnings season is in full swing, with major companies like Netflix and several airlines set to release their reports.
Additionally, important economic updates are on the horizon, including the European Central Bank’s rate decision, which is expected to stay the same but may provide guidance for the future.
Asian stocks climb amid Fed rate cut optimism
The Dow Jones Industrial Average climbed 1.85 per cent to 40,954.48, while the S&P 500 rose 0.64 per cent to 5,667.2, and the Nasdaq Composite edged up 0.2 per cent to 18,509.34.
The Russell 2000 marked its fifth straight day of gains over 1 per cent, its longest winning streak since April 2000.
UnitedHealth Group jumped 6.5 per cent after posting higher-than-expected profits, pushing both the Dow and the S&P 500 Health Care index to record highs.
Bank of America’s second-quarter profits beat forecasts, with underwriting fees rising due to a revival in capital markets.
The bank’s positive net interest income outlook lifted its shares by 5.3 per cent. Despite Morgan Stanley’s disappointing wealth management revenue, its shares still rose 0.9 per cent.
In Asia, Hang Seng futures gained 0.6 per cent, Japan’s Topix increased by 0.5 per cent, and Australia’s S&P/ASX 200 rose 0.2 per cent.
In commodities, gold remained steady after a nearly 2 per cent rally on Tuesday, hitting a record $2,469.66 per ounce, while West Texas Intermediate oil stayed mostly unchanged following its third consecutive decline on Tuesday.
Bitcoin prices rose 1.9 per cent to $65,917 per token.