U.S. and European equities rallied on Thursday following the release of the latest monthly U.S. Consumer Price Index (CPI). Futures on the benchmark S&P 500 gained 0.2% as did those on the Dow Jones Industrial Average, while contracts on the tech-heavy Nasdaq 100 were up 0.3%. The Stoxx Europe 600 rose by 0.2%.
July’s CPI report showed that prices rose at their slowest rate year-over-year since 2021. Cisco Systems stocks jumped by 7.4% in premarket trading following the release of the CPI, while Danish pharmaceutical Bavarian Nordic A/S surged by 17%. Ultimately, the positive CPI data has lifted investor confidence, with traders betting on an interest rate cut in September by the Federal Reserve.
“The latest US inflation data supports our view of a gradual cooling of the US economy,” Mark Haefele, chief investment officer at UBS Global Wealth Management confirmed. “This underlines our view that the Fed will start easing policy at its September meeting. That provides a positive backdrop for risk assets.” Traders are anticipating a 25 basis point rate cut next month as well as a total of 100 basis points in reductions for the rest of the year.