Wall Street Mixed as Investors Digested US CPI Data

The annual inflation rate in the US increased to 3% in January, up from 2.90% in December, surpassing expectations of 2.90%. On a monthly basis, the Consumer Price Index (CPI) rose by 0.50%, marking the highest increase since August 2023. Meanwhile, core inflation on an annual basis climbed to 3.30%, exceeding the anticipated 3.10%. Monthly core inflation also accelerated to 0.40% from 0.20%. US stocks pared earlier losses as investors evaluated how rising long-term Treasury yields might impact the corporate sector. The S&P 500 and {Nasdaq hovered near breakeven, while the Dow pared a sharp 500-point drop but remained in negative territory. With both headline and core inflation exceeding forecasts, concerns grew that the Federal Reserve may need to maintain restrictive interest rates for an extended period to curb persistent inflation.

In South Africa, the local stock market gained 0.41%, while the South African Chamber of Commerce and Industry (SACCI) business confidence index slipped to 120 in January 2025 from December’s 121, which was the highest level since February 2015. The decline was mainly driven by weaker export volumes, though increased imports, higher vehicle sales, and a rise in tourism provided some support. SACCI noted that business sentiment had broadly improved following the formation of a coalition government in June last year but highlighted uncertainty surrounding the policies of incoming US President Donald Trump.

In Asia, the Hang Seng Index jumped 2.70% on Wednesday to close at 21 858, rebounding from the previous session’s losses and reaching its highest level since early October. The rally was fueled by ongoing enthusiasm for AI-related stocks. A strong performance in mainland Chinese markets further bolstered sentiment, with their tech sector outperforming the Nasdaq 100 and entering a bull market over the past month. However, gains were somewhat limited due to a slight pullback in US futures ahead of key US inflation data and Federal Reserve Chair Jerome Powell’s testimony before the House Committee on Financial Services.

European stocks recovered from earlier losses and ended slightly higher on Wednesday, continuing their recent rally as strong corporate earnings offset concerns about a more hawkish Federal Reserve. The Eurozone’s STOXX 50 gained 0.30%, reaching a nearly 25-year high of 5 406, while the broader STOXX 600 inched up 0.10% to a record high of 548.

In the commodities market, WTI crude oil futures dropped over 2%, falling below $71.8 per barrel on Wednesday, extending earlier declines. The drop followed comments from US President Trump, who stated that he had spoken with Russian President Putin, prompting speculation about reduced supply risks from Russia. Trump indicated that negotiations would begin between delegations to end Russia’s war in Ukraine, which had led to sanctions on Russian oil producers and tanker operators since the conflict began in 2022.



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