World shares hit record highs after U.S. data

The Dow Jones Industrial Average closed up 1.10%, the S&P 500 gained 1.13% and the Nasdaq Composite advanced 1.39%

World shares hit record highs on Tuesday after U.S. consumer prices data fuelled expectations of an impending Fed rate cut in September, and a trade war truce between Washington and Beijing also buoyed sentiment.

On Wall Street, the benchmark S&P 500 and the Nasdaq hit record highs after losing ground in the previous session. All 11 sectors on the S&P 500 gained, led by stocks in communication services, technology and financials.

The Dow Jones Industrial Average closed 1.10% higher, the S&P 500 added 1.13% and the Nasdaq Composite rose 1.39%.

European stocks closed higher, rising 0.21%. MSCI’s gauge of stocks across the globe added 1% to 947.66, hitting a fresh record high.

Asian equities had rallied overnight after U.S. President Donald Trump signed an executive order pausing triple-digit levies on Chinese imports for another 90 days. MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.18%.

Markets on Tuesday traded on short-term relief, however, as the softer-than-expected consumer price data firmed up bets for U.S. rate cuts. Traders are pricing in a 94% chance of a Fed cut in September, up from nearly 86% a day ago and about 57% a month earlier, according to the CME FedWatch tool.

The U.S. and China have engaged in a tit-for-tat tariff duel throughout the year, culminating in trade talks in Geneva, London, and Stockholm since May that have focussed on bringing tariffs down from triple-digit levels.

Chinese exports climbed 7.2% year-on-year in July, but the nation’s factory gate prices declined by the most in two years in a further sign of manufacturers struggling to sell goods at home.