World stocks reached new all-time highs on Thursday. Traders were excited about upcoming U.S. data expected to show lower inflation, which could allow the Federal Reserve to start cutting interest rates as soon as September.
Busy Day in the World’s Markets
It was a busy day in the markets. Along with the upcoming U.S. inflation figures, Wall Street’s earnings season began. Britain reported strong economic growth, European soccer teams had success, and several central banks were adjusting interest rates.
European Markets
European markets rose by 0.4%-0.7% in the morning. With record highs in the U.S. and Tokyo overnight, the MSCI’s main world index also reached a new peak, gaining nearly 14% for the year.
Bonds and Dollar
Bond markets and the dollar stayed steady. The yen remained weak at around 161 per dollar, near its lowest levels in decades. Meanwhile, the British pound climbed to a 4-month high after a couple of good days.
good News for the Pound
Societe Generale’s Kit Juckes said, “Don’t be too surprised that because we’ve had some good GDP numbers, a stable government, and a European soccer final, we have some post-election optimism for the pound.” This came after a better-than-expected 0.4% GDP rise and England’s victory over the Netherlands in Germany.
Historical Boost for Stocks
Historically, winning the European Championship tends to boost the stock market, as seen with Italy, Spain, and Greece in recent years. However, Portugal’s 2016 title was followed by underperformance.
Asian Markets Reach Records
Overnight, Japan’s Nikkei rose 1% to a record high of 42,426 points. Taiwanese stocks also reached a record, and Australia’s ASX 200 closed near its all-time high. Another surge in Nvidia and other major Wall Street companies led both the Nasdaq and S&P 500 to close at new peaks.
U.S. Federal Reserve Chair Jerome Powell told lawmakers on Wednesday that more positive data would strengthen the case for cutting interest rates. Futures pricing suggests a 75% chance of a rate cut in September. Economists expect annual U.S. CPI to slow to 3.1% in June from 3.3% in May.
The Bank of Korea kept interest rates unchanged but did not warn about inflation. Governor Rhee Chang-yong said it was time to prepare for rate cuts. Malaysia also held its rates steady.
U.S. earnings season began, though not with the best results. Both PepsiCo and Delta Air Lines reported disappointing numbers. Bank results are due on Friday.
China’s yuan rallied from an almost eight-month low to 7.2701 per dollar. Chinese stocks rose with the market momentum, but disappointing data and tariff concerns in major export markets have made rallies hard to sustain. China’s GDP data is due on Monday.
Sterling and Euro Gains
In Europe, the British pound’s 4-month high of $1.2874 came after better-than-expected GDP data and a less clear statement on rate cuts from the Bank of England’s chief economist. The euro also rose to $1.0847.
Yen Slips
The yen slipped to 161.7 per dollar after data showed Japan’s core machinery orders fell for the second month in a row, challenging expectations for interest rate increases.
Currency and Commodity Updates
The New Zealand dollar found support at its 200-day moving average, trading at $0.6095. The Australian dollar rose 0.2% to a six-month high of $0.6763.U.S. Treasury yields held steady in Europe, with two-year yields at 4.62% and 10-year yields at 4.29%.
In commodity trading, oil prices edged higher on signs of strong U.S. gasoline demand. Brent futures rose 16 cents to $85.24 a barrel, and U.S. crude climbed 20 cents to $82.30 a barrel.
Gold also rose 0.5% to $2,381 an ounce. After last week’s selloff, bitcoin steadied around $58,900.
source and Special Thanks to Reuters
