Euro Zone Inflation Data Eyed Amid Fed Rate Cut Bets

Global markets are poised for a positive end to August, with Asian shares rising and the US dollar set for its worst monthly performance since November. Investors anticipate a Fed rate cut on September 18, while euro zone inflation data could influence ECB decisions. Key US stock futures extended Wall Street’s gains, and European markets await crucial economic reports.

Equities

The FTSE 100 edged up 0.4% on Thursday, driven by gains in the travel and mining sectors. Whitbread led the charge, rising 3.7% after receiving an upgrade from Bernstein. Precious metal miners gained 1.1% as gold prices increased, boosted by expectations of a September interest rate cut by the Federal Reserve. CAB Payments saw a notable increase of 4.8% following its partnership with Visa for cross-border payments, while Centrica rose 1.5% after Jefferies upgraded the energy supplier’s stock. However, real estate investment trusts fell 1.9%, with LondonMetric Property dropping 3.5% due to trading ex-dividend. Spirits maker Diageo also dipped 1.2% for the same reason.

In the US, the Dow Jones Industrial Average climbed 0.59% to close at a record high of 41,335.05 points, supported by strong US economic data indicating a 3% GDP growth in Q2. The S&P 500 remained flat at 5,591.96 points, just below its July record high, as investors maintained expectations of a potential interest rate cut in September. Meanwhile, the Nasdaq slipped 0.23% to 17,516.43 points.

Nvidia saw its stock drop over 6% after its quarterly revenue forecast failed to meet the high expectations set by recent strong performances. Despite this, Nvidia's stock remains up 137% for the year. Apple bucked the trend, rising 1.5% after Citigroup named it its top AI pick, amid reports of ongoing talks between Apple and Nvidia to invest in OpenAI. Other AI-related stocks were mixed, with Microsoft gaining 0.6% while Alphabet dipped 0.7%. Broadcom and AMD both fell nearly 1%.

CrowdStrike saw a 2.8% increase after reporting better-than-expected quarterly revenue, while Dollar General plunged 32% after it slashed its annual sales and profit forecasts. Overall, volume on US exchanges was lighter than usual, with 10.5 billion shares traded compared to the average of 11.6 billion over the previous 20 sessions.

Forex & Commodities

The US dollar is set to end its five-week losing streak, trading near a one-week high against major currencies. This follows strong US economic data, including an upward revision of Q2 GDP growth to 3.0%, which has tempered expectations for aggressive Federal Reserve rate cuts. The dollar index, measuring the greenback against six major peers, rose 0.36% to 101.37, its highest since August 22. The euro weakened to $1.1077, pressured by cooling inflation in Germany and Spain, which supports the case for European Central Bank easing.

Gold prices climbed nearly 1%, with spot gold reaching $2,524.45 per ounce, as investors anticipate a potential Fed rate cut in September. Meanwhile, oil prices rebounded after two sessions of losses, bolstered by concerns over Libyan supply disruptions. Brent crude futures rose 1.64% to $79.94 per barrel, while US crude increased by 1.87% to $75.91.

In currency markets, the Japanese yen hovered near 145 per dollar, largely unaffected by data showing Tokyo’s core consumer prices rose by 2.4% in August. Sterling was steady at $1.3165, while the Australian dollar reached its highest level since January at $0.6824, supported by strong consumer price figures.