Global equity markets experienced a largely positive trend on Thursday, driven by favorable US inflation data and a rebound in tech stocks. The US consumer inflation rate slowed to 2.7 percent in November, falling short of analysts’ expectations of 3.1 percent. This development has sparked hopes that the Federal Reserve may adopt a more accommodative monetary policy stance in the future.
According to eToro analyst Bret Kenwell, “Although this is just one inflation reading—and admittedly not the Fed’s preferred inflation gauge—easing inflation concerns could open the door to a more accommodative Fed moving forward.” The tech-heavy Nasdaq Composite index rose 1.4 percent, led by a strong performance from chip company Micron Technology, which saw its quarterly profits nearly triple to $5.2 billion due to the AI boom.
Other major tech companies, including Google parent Alphabet, Nvidia, and Facebook parent Meta Platforms, also experienced gains of around two percent or more. The sector’s rebound was welcomed by investors, with Trade Nation analyst David Morrison noting, “The sector got a boost from a strong set of quarterly results from Micron Technology.” However, Morrison cautioned that it remains to be seen whether the current uptrend will translate into a sustained “Santa Rally” or merely represents a short-term correction.
In other news, the Bank of England reduced its key interest rate to 3.75 percent, while the European Central Bank maintained its rates steady, as expected. ECB chief Christine Lagarde indicated that all options are on the table regarding future interest rate decisions, citing high global uncertainty. The new macroeconomic projections suggest little scope for further easing in the short term, according to GianLuigi Mandruzzato, senior economist at EFG Asset Management.
Key stock market indices recorded mixed results, with the Dow Jones Industrial Average rising 0.1 percent, the S&P 500 gaining 0.8 percent, and the Nasdaq Composite advancing 1.4 percent. In Europe, the FTSE 100, CAC 40, and DAX indices all ended the day higher, while Asian markets were mostly lower. The euro and pound sterling experienced minor fluctuations against the US dollar, and oil prices edged higher.
As investors continue to navigate the complexities of the global economy, the recent cooldown in US inflation and rebound in tech stocks offer a cautiously optimistic outlook. However, ongoing concerns surrounding Fed policy and AI equity valuations may pose headwinds to a potential year-end rally. With central banks maintaining a watchful stance, market participants will be closely monitoring future developments to gauge the trajectory of the global economy.
