Market Analysis: Global Indexes Rise on Soft US Inflation Data Reading

Global Markets

By: STA Research

Global financial markets are mostly rising on  several key developments which influenced stock indexes, commodity prices, and currency movements. Despite some headwinds in the commodities sector, equities showed resilience, and economic data provided mixed signals.

Canadian Stock Index Up Despite Commodity Price Eases

Canada’s main stock index posted gains, buoyed by positive performance in sectors not directly impacted by falling metal prices and easing oil prices. The resilience of Canadian equities highlights a broader market strength and investor confidence, even as commodities faced downward pressure.

U.S. Indices Surge on Low Inflation Figures

In the U.S., stock indices surged sharply following the release of lower-than-expected inflation figures. The Consumer Price Index (CPI) for July came in at 2.2%, below the anticipated rate, suggesting that inflationary pressures are moderating. This positive inflation data eased concerns about aggressive monetary tightening by the Federal Reserve, leading to a robust rally in U.S. equities.

European Shares Up Despite German Investor Morale Drop

European shares also experienced an uptick, driven by broader regional optimism. However, German investor morale took a hit in August, reflecting underlying economic concerns in Europe’s largest economy. The mixed economic signals from Germany contrasted with the positive performance of European markets, as investors remained hopeful about the region’s economic recovery.

Japan’s Nikkei Surges After Holiday

In Asia, Japan’s Nikkei index surged as traders returned from a public holiday. The positive momentum in Japan’s equity market reflects renewed investor activity and optimism following the break.

Commodity Prices: Oil and Gold Trends

• Oil Prices: Oil prices softened as markets recalibrated their expectations. The Organization of the Petroleum Exporting Countries (OPEC) revised down its demand growth forecast for 2024 due to weaker expectations from China, contributing to the decline in oil prices. This adjustment highlights ongoing concerns about global demand.
• Gold Prices: Gold prices saw a decline as traders took profits following the metal’s recent all-time high. The retreat in gold prices comes after a period of strong performance, reflecting a natural market adjustment after significant gains.

Currency Movements

The U.S. dollar strengthened in the wake of the positive inflation data, reflecting increased confidence in the U.S. economic outlook. This appreciation of the dollar comes amid shifting global economic conditions and varying investor sentiments across different markets.

Corporate Stock News

• B. Riley Financial Inc: Shares fell sharply by 52% following a delay in its quarterly report and expectations of a significant second-quarter loss. The company anticipates reporting a loss between $435 million and $475 million for the quarter, compared to a profit of $44 million a year earlier.
• Blackstone Inc: Announced the sale of 3,000 shared-ownership homes to the Universities Superannuation Scheme for £405 million. This significant transaction in the UK housing sector follows a recent acquisition of rental homes from Vistry.
• Boeing Co: Likely to miss its 2024 production target for the 737 MAX due to challenges such as potential labor disruptions. Analysts at Moody’s and S&P have indicated that Boeing may not meet its goal of producing 38 MAX jets per month until 2025.
• Carlyle Group Inc: Acquired Baxter’s kidney-care unit, Vantive, for $3.8 billion. This move is part of Baxter’s strategy to reduce its debt and follows its $10.5 billion acquisition of Hill-Rom.
• General Motors Co: Recalling 21,469 Cadillac Lyriq electric SUVs in the U.S. due to concerns about unexpected activation of the anti-lock brake system. The issue will be addressed with an over-the-air update.
• Exxon Mobil Corp: Issued layoff notices to 59 employees following its $60 billion acquisition of Pioneer Natural Resources. Over 1,500 Pioneer employees were offered new positions as part of the merger.
• Flix SE: Porsche Automobil Holding SE is joining an investor group to acquire a 35% stake in Flix SE, which owns Greyhound services in North America and FlixBus in Europe.
• Home Depot Inc: Forecasted a decline in annual profit and comparable sales, revising its previous forecasts downward due to reduced demand for home improvement projects and increased borrowing costs.
• On Holding AG: Reported second-quarter revenue above estimates due to strong customer demand. However, shares fell in premarket trading as the company reiterated its annual sales forecast amid supply chain challenges.
• Pandora: Raised its full-year growth outlook, reflecting a positive expansion outlook compared to other consumer goods companies.
• Porsche Automobil Holding SE: Announced it is part of an investor group acquiring a 35% stake in Flix SE, enhancing its presence in the transportation sector.
• Sun Life Financial Inc: Exceeded quarterly profit estimates, driven by strong sales in Canada and Asia. Earnings per share came in at C$1.72, surpassing the average estimate of C$1.58.
• Spirit AeroSystems Holdings Inc: CEO Patrick Shanahan will receive a $28.5 million payout upon completion of its merger with Boeing, including a cash payment and restricted stock units.
• Tencent Music Entertainment Group: Reported a smaller-than-expected revenue decline, helped by an increase in paying subscribers despite a crackdown on live-streaming in China.
• WSP Global Inc: Announced plans to acquire U.S.-based Power Engineers for $1.78 billion. The acquisition is expected to enhance WSP’s earnings and support its growth in the energy transition sector.
• Novartis: Failed to block MSN Pharmaceuticals from launching a generic version of its heart-failure drug Entresto, according to a federal court decision.