Cooler-than-expected US producer inflation boosts global sentiment

US stocks rallied on Tuesday as investors assessed cooler-than-expected producer inflation data, which sparked speculation that the Federal Reserve (Fed) might consider a more substantial interest rate cut in September. The Producer Price Index (PPI) showed a 2.20% annual increase, aligning closely with the Fed’s 2% inflation target, providing some confidence to the market. Looking ahead, market participants are focused on the upcoming Consumer Price Index (CPI) report and Thursday's retail sales data, both of which will be crucial in assessing the overall health of the US economy. For the session, the S&P 500 advanced 1.60%, the Nasdaq 100 climbed 2.50%, and the Dow Jones finished 4.8 points higher. The dollar nursed losses against most major currencies and continued to weaken amid a rally in risk assets.

European stocks bounced back from morning losses to close higher on Tuesday, continuing the recovery from last week's equity selloff amid a retreat in global credit costs as investors weighed growth concerns in Europe. The STOXX 50 and STOXX 600 both rose by 0.50%, reaching 4 692 and 502, respectively. The weaker-than-expected US PPI led to lower European bond yields, helping key industrial and tech stocks gain momentum. Trading Economics further reported that Schneider, Siemens, and SAP all advanced between 1% and 2%, leading the charge among mega-caps, while Adyen surged over 3%. On the other hand, economic sentiment indicators for both the Eurozone and Germany fell more sharply than anticipated in August, according to ZEW data, limiting further gains.

Chinese stocks rebounded from six-month lows on Tuesday, following the upward trend of regional peers as risk sentiment improved. However, gains were limited by ongoing economic concerns and policy uncertainty. Investors remained cautious ahead of a series of key Chinese economic reports due this week, including industrial production, retail sales, and unemployment figures. Additionally, major tech giants including Foxconn Industrial (SS:601138), Tencent Holdings (HK:0700), and Alibaba (NYSE:BABA) are slated to report earnings this week. The Nikkei 225 Index rose 0.40% to around 36 390 while the broader Topix Index added 1% to 2 579 on Tuesday, extending gains from the previous session and tracking Wall Street higher as softer-than-expected US producer inflation data supported bets for Fed interest rate cuts.

The FTSE/JSE All Share Index (ALSI) rebounded from earlier losses to close about 0.50% higher at 80 956 on Tuesday, ending a two-day losing streak. Market sentiment improved after the US PPI report indicated easing inflation pressures, fuelling speculation that the Fed might begin cutting interest rates as soon as next month. On the domestic front, the country's mining activity contracted in June more than expected, and the unemployment rate unexpectedly rose to a two-year high of 33.50% in the second quarter. On the corporate front, resource-linked stocks and financials led the gains. At 19h00, the rand strengthened by 0.50% to R18.14/$ and 0.15% to R19.89/€, while little changed at R23.28/£.

Oil prices fell over 1% on Tuesday following a 3% rise in the previous session, as investors monitored the escalating conflict in the Middle East, which could potentially reduce global crude supplies. Meanwhile, rising demand for safe-haven assets pushed gold prices higher. Gold lost 0.14% to trade at $2 468.74/oz, while platinum gained 0.17% to $938.13/oz.



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