Equities rise after US inflation data
U.S. stock market’s three main indices pushed higher, with the tech-heavy Nasdaq Composite finishing up 1.4%
Equity markets mostly rose on Thursday as investors welcomed cool US inflation data while tech stocks gained and central banks avoided monetary policy surprises.
US consumer inflation slowed unexpectedly in November, jumping 2.7% from a year ago, coming in considerably below analysts’ predictions of a 3.1% rise.
Although this is just one inflation reading — and admittedly not the Fed’s preferred inflation gauge — easing inflation concerns could open the door to a more accommodative Fed moving forward, said eToro analyst Bret Kenwell.
U.S. stock market’s three main indices pushed higher, with the tech-heavy Nasdaq Composite finishing up 1.4%.
Large tech companies bounced following strong results from chip company Micron Technology, which soared more than 10% after reporting that quarterly profits nearly tripled to $5.2 billion as it benefits from the AI boom.
Other big AI players also prospered, with Google parent Alphabet, Nvidia and Facebook parent Meta Platforms all gaining about 2% or more.
Oracle, which endured a bruising session on Wednesday, jumped 0.8%.
The sector got a boost from a strong set of quarterly results from Micron Technology, said Trade Nation analyst David Morrison.
The question now is if today’s bounce is a dip-buying opportunity which morphs into a ‘Santa Rally’, or if it is simply a round of short-covering ahead of another lurch lower, said Morrison.
Hopes for an end-of-year rally, often called a Santa Claus Rally, face potential headwinds this year due to questions about U.S. central bank policy and scrutiny of lofty AI equity valuations.
The Bank of England, as expected, cut its key interest rate to 3.75% after UK inflation eased faster than expected and as the economy weakened.
The European Central Bank held rates steady, also as expected, while it raised growth forecasts for this year and next.
It was the fourth meeting in a row where the ECB held rates steady following a year-long series of cuts.
The new macroeconomic projections suggest there is little scope for further easing in the short term, said GianLuigi Mandruzzato, senior economist at EFG Asset Management.
ECB chief Christine Lagarde indicated that all optionalities should be on the table regarding future interest rate decisions, citing high global uncertainty.
Both Frankfurt and Paris stocks closed the day higher.