Global Stock Markets Surge as Inflation Pressures Ease

Global stock prices surged last week as inflation pressures in Western countries gradually eased, indicating that the cycle of interest rate hikes by central banks will soon come to an end.

On Wall Street, the Dow Jones rose 2.3 percent last week to 34,509 points, while the S&P 500 jumped 2.4 percent to 4,505 points, and the Nasdaq index increased by 3.3 percent to 14,113 points.

The rise in indices is attributed to a series of data showing that inflation in the U.S. continues to ease. It was reported that consumer prices rose by 0.2 percent in June compared to the previous month, while on an annual basis, they increased by 3 percent, the lowest since early 2021. The core inflation rate, excluding food and energy prices, fell from 5.3 to 4.8 percent in June.

It was also reported that producer prices rose by only 0.1 percent on an annual basis in June, marking their mildest increase since mid-2020.

All of these figures are better than analysts expected, reinforcing investors’ belief that the U.S. central bank will soon conclude the cycle of interest rate hikes, which has been ongoing for more than a year.

Several Fed officials have indicated that further rate increases will be necessary to curb inflation, but also that the end of the rate hike cycle is approaching.

At the June meeting, Fed leaders kept rates unchanged until the effects of the previous tightening of monetary policy on the economy and inflation can be assessed.

Analysts believe that the Fed will raise rates by an additional 0.25 percentage points at this month’s meeting. This may be the last increase in this cycle.

– “The market senses that the Fed is getting closer to the last increase and the end of the monetary policy tightening cycle,” says Quincy Krosby, a strategist at LPL Financial.

After a sharp decline last year, the S&P 500 index has risen about 17 percent since the beginning of this year.

European stock prices also rose last week, recovering almost all losses from the previous week. The London FTSE increased by 2.45 percent to 7,434 points, while the Frankfurt DAX jumped by 3.2 percent to 16,105 points, and the Paris CAC rose by 3.7 percent to 7,374 points.