After US markets set new peaks last month, shares in Europe and Asia surged higher on Wednesday. This came after data showed a minor improvement in U.S. inflation. A day earlier, Tokyo’s benchmark Nikkei 225 reached a new high. The S&P 500 saw a 0.2% increase in the future, but the Dow Jones Industrial Average saw minimal change.
A prolonged pause in President Donald Trump’s trade battle with China has brought respite, and continued expectations that the Federal Reserve would lower interest rates have also contributed to a recent spike in share prices. A reduction in the consumer price index in July served to support those.
Following a US session that appeared to have been triggered by someone pressing the “infinite bid” button when the CPI failed to blow the doors off inflation, Asia woke up in full risk-on mode, according to a commentary by Stephen Innes of SPI Asset Management.
China and the United States decided to extend their halt in significantly higher tariff rates on each other’s exports for 90 days, starting on August 12, in order to give themselves more time to negotiate a comprehensive trade agreement. Although there is still uncertainty about the outcome of the discussions, the truce has reduced pressure on Asian nations and businesses that mostly depend on supply chains that pass through China.
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