Investors reacted positively to cooler-than-expected core US inflation data for December, driving global stock markets higher and sending the US dollar lower. The data fueled expectations for a second rate cut by the Federal Reserve this year. Strong fourth-quarter earnings reports from major financial institutions also contributed to the upbeat market sentiment.
Global stock market s surged and the U.S. dollar weakened on Wednesday, fueled by data revealing that core U.S. inflation increased at a slower pace than anticipated in December. This development heightened the likelihood of a second rate cut by the Fed eral Reserve this year. Investors also reacted positively to the initial wave of quarterly earnings reports.According to the Bureau of Labor Statistics, the consumer price index (CPI) climbed by 2.
9% annually in December, aligning with expectations and reflecting a slight uptick from November's 2.7% growth. Core inflation, which excludes volatile food and energy prices, rose by 3.2%, falling short of forecasts predicting a 3.3% annual increase.U.S. stock index futures jumped by 1.5% to 1.7%, rebounding from an earlier gain of 0.3%. The dollar experienced a 0.5% decline against a basket of major currencies. The positive sentiment in the stock market was further amplified by impressive fourth-quarter results from prominent financial institutions like JPMorgan (JPM.N), BlackRock (BLK.N), and Goldman Sachs (GS.N). JPMorgan reported its highest-ever annual profit, BlackRock recorded a record $11.6 billion in assets, and Goldman Sachs witnessed a more than doubling of profits in the final quarter of 2024.U.S. Treasury yields, which reached 14-month highs near 4.8% earlier this week, retreated by 8.6 basis points to 4.704%. Michael Brown, senior research strategist at Pepperstone, commented on the inflation data, stating that the core index rose by 3.2% year-on-year, the slowest rate since August, indicating a gradual easing of underlying inflationary pressures. However, he emphasized that the CPI figures don't significantly alter the broader economic narrative, highlighting that persistent price pressures remain a concern. Despite this, futures markets suggested that traders now anticipate nearly 40 basis points in rate cuts from the Federal Reserve this year, up from around 30 basis points before the inflation release
INFLATION FED STOCK MARKET DOLLAR EARNINGS ECONOMY
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