Goldilocks inflation data fuels rally from Wall Street to Asia
Stock markets worldwide hit fresh record highs on Wednesday, with benchmarks from Wall Street to Tokyo and even Ho Chi Minh City climbing on optimism that central banks will maintain accommodative policy amid cooling inflation.
The MSCI All Country World Index and several United States (US) indices set new all-time highs, while Japan’s Nikkei 225 surged past the 43,000 mark for the first time, and cryptocurrency ether jumped to levels last seen nearly four years ago.
The rally followed US inflation data that landed in a “Goldilocks” zone – headline inflation held steady at 2.7%, below expectations for a tariff-driven uptick, and core inflation rose to 3.1%, its highest in six months but not hot enough to deter policymakers.
The softer-than-forecast figures strengthened market bets on a Federal Reserve (Fed) rate cut next month, with traders pricing in a 94% probability of a 25 basis point move in September and another cut by year-end.
FTSE 100 nears record high
On Wednesday morning the FTSE 100 resumed where it left off on Tuesday and is fast approaching its July record high at 9189.30. If overcome on a daily chart closing basis the 161.8% Fibonacci extension of the October 2022 to February 2023 6707.62 to 8047.06 advance, projected higher from the 7206.82 March 2023 low, at 9374.03 represents the next technical upside target.
FTSE 100 daily candlestick chart