NEW YORK, United States — Stocks surged while the dollar dropped Tuesday as
US inflation slowed more than expected, opening the way for the Federal Reserve
to reduce the tempo of interest rate hikes.
اضافة اعلان
US consumer prices
rose at an annual pace of 7.1 percent in November, down from 7.7 percent in
October, according to
Labor Department data.
The consumer price
index is a closely watched measure of inflation and was forecast by analysts to
come in higher.
The
bigger-than-expected drop should come as a relief to monetary policymakers
after wholesale inflation proved hotter than expected last week.
“The key takeaway
from the report at first blush is that overall inflation is cooling and that
the Fed should be convinced to temper the pace of its rate hikes and perhaps
place a lower ceiling on its terminal rate,” said market analyst Patrick O’Hare
at Briefing.com.
The central bank is
widely expected to lift interest rates 50 basis points Wednesday — a slowdown
from its previous four hikes.
Lower inflation
and interest rates are positive for businesses, and stock prices in
Europe surged after the US inflation data was released.
While they later
gave up part of those gains, London ended the day up 0.8 percent, Frankfurt 1.3
percent and Paris 1.4 percent.
Wall Street’s main
indices ended higher as well, with the Dow ending 0.3 percent higher and the
tech-rich Nasdaq Composite Index rising 1.0 percent.
“In summary, Santa
has delivered a nice enough package to the Fed, who can now celebrate the
Christmas with more peace knowing that inflation is moving in the direction
that they want with plenty of tail wind behind,” said Naeem Aslam, chief market
analyst at Avatrade.
The prospect of the
Fed slowing interest rate hikes was not positive for the US dollar, however,
which lost more than one percent against its main rival currencies before
cutting losses.
The weak dollar
helped oil prices jump more than three percent, with Brent crude rising back
above $80 per barrel.
Elsewhere, China’s
shift away from its economically damaging zero-COVID policy continued to
support sentiment as the world’s number two economy opens up.
Top Chinese
officials are meeting this week to draw up their economic blueprint for
re-emerging from COVID, with observers predicting more stimulus measures and
pledges of support for the troubled property sector.
But there is also a
worry among investors that the quick relaxation of containment measures such as
mass testing and lockdowns might lead to a surge in infections that could
overwhelm the healthcare system and weigh on the economy.
“China’s reopening
is coming, it won’t happen overnight, but it will provide a major boost to
demand in the outlook next quarter,” said OANDA’s Edward Moya.
Ahead of the Wall
Street open, United Airlines unveiled an order of 100 new Boeing 787
Dreamliners with options for an additional 100 jets.
Shares in Boeing
climbed 0.9 percent, but United Airlines tumbled nearly seven percent.
And the
US Securities and Exchange Commission charged
disgraced cryptocurrency tycoon Sam Bankman-Fried with defrauding customers of
billions of dollars.
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