US stocks hit record highs after inflation data

Today’s headlines

What’s happening: US stocks surged to record closing highs on Thursday, after data showed that inflation had reached the highest in seven months.

What happened: Inflation and jobless reports from the US sparked speculations of the Federal Reserve cutting interest rates at its upcoming meeting this month.

Gains in shares of Tesla and Micron Technology provided a further boost to Wall Street’s leading stock indices on Thursday.

Why it matters: Data released on Thursday showed that US consumer prices surged higher-than-expected in August, while the annual rise in inflation was the biggest in seven months. The annual inflation rate accelerated to 2.9% in August, from 2.7% in both June and July.

Meanwhile, initial jobless claims rose by 27,000 to 263,000 in the week ended September 6, close to a four-year high.

The data releases triggered widespread speculations of the Fed slashing its benchmark interest rates by at least 25 basis points at its monetary policy meeting next week. Some investors expect a higher cut of 50 basis points. Markets also widely expect the central bank to deliver more than one interest rate cut this year.

Shares of Warner Bros Discovery jumped nearly 29% on reports of Paramount Skydance considering a takeover bid. Tesla’s stock jumped around 6%. Micron Technology’s stock surged 7.5% ahead of the company’s quarterly results, after analysts forecasted a rise in chip prices due to higher AI demand. The Philadelphia SE Semiconductor Index also climbed to a record high on Thursday.

Of the 11 sectors on the S&P 500, 10 recorded gains on Thursday, with materials and healthcare stocks being among the top performers.

The Dow Jones jumped 617.08 points, or 1.36%, to close at 46,108.00, while the S&P 500 added 0.85% to 6,587.47 and the Nasdaq 100 climbed 0.60% to settle at 23,992.56.

After the closing bell on Thursday, Adobe’s shares rose around 3% as the company reported better-than-expected third-quarter results and raised its full-year guidance.

What to watch: Investors await the release of economic data on Michigan consumer sentiment (1800 UAE Time) from the US today. The University of Michigan consumer sentiment, which fell to 58.2 in August from a five-month level of 61.7 in July, is expected to decline further to 58 in September.

The markets today

The New Zealand dollar in focus today ahead of some major economic reports next week

Context: The NZD/USD forex pair edged higher this morning as investors digested the latest economic data.

Details: Data released this morning showed that New Zealand’s electronic card transactions rose 0.7% to NZ$6.94 billion in August. However, the BusinessNZ Performance of Manufacturing Index declined to 49.9 in August, from 52.8 in the previous month.

Pressure on the US dollar lent support to the NZD/USD forex pair this morning. The US dollar index, which measures the greenback’s performance versus a basket of major peers, hovered below the 98.0 level through Thursday and this morning, after the latest inflation data suggested that the Fed could cut interest rates.

The NZD/USD pair rose around 0.2% to 0.5971 this morning, while the S&P/NZX 50 index climbed around 0.1% to 13,241.18.

What to watch: Data on composite NZ PCI (0230 UAE Time) and services NZ PSI (0230 UAE Time) from New Zealand will be released on Monday. Composite PMI in New Zealand, which rose to 50.50 points in July from 48.30 points in the previous month, is expected to climb further to 50.7 in August. Analysts expect New Zealand’s BusinessNZ performance of services index to surge to 49.5 in August, from 48.9 in July.

Data on food inflation from New Zealand, due to be released on Tuesday, will also remain in focus.

Other Markets: European indices closed higher on Thursday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.78%, 0.30%, 0.80% and 0.55%, respectively.

The news shaping the markets

Ukraine’s President Volodmyr Zelenskyy said Russian forces had announced a massive attack across the country. The news sent the RUB/USD pair higher in forex trading this morning.

Germany’s current account surplus narrowed to €14.8 billion in July, from €18.8 billion in the year-ago period, exerting pressure on the EUR/USD forex pair.

Brazil’s retail sales declined 0.3% in July. However, the figure coming in-line with market estimates sent the BRL/USD pair higher in forex trading this morning.

Mexico’s industrial output declined by 2.7% year-over-year in July. This being the fourth straight month of decline exerted pressure on the MXN/USD forex pair.

South Africa’s manufacturing output fell by 0.7% year-over-year in July, compared to a 1.9% gain in the previous month, sending the ZAR/USD pair lower in forex trading this morning.

What else to watch today

India’s inflation rate (1430 UAE Time), bank loan growth (1530 UAE Time), deposit growth (1530 UAE Time) and foreign exchange reserves (1530 UAE Time), Russia’s interest rate decision (1430 UAE Time) and GDP growth rate (2000 UAE Time), UK’s NIESR monthly GDP tracker (1500 UAE Time), Canada’s building permits (1630 UAE Time) and capacity utilisation (1630 UAE Time), as well as US Baker Hughes oil rig count (2100 UAE Time) and Baker Hughes total rigs count (2100 UAE Time).