Global equity markets are headed for a fourth month of gains, largely driven by hopes of a soft landing for the U.S. economy and interest rate easing. Asian equities were up overnight, with Hong Kong leading gains in the region as Chinese electric vehicle makers rallied. The Hang Seng has gained almost 2% today, driven by strong performances from EV makers BYD and Li Auto, both of which had weak earnings results earlier this week that had suppressed their share prices.
U.S. economic growth was stronger than initially reported in the second quarter, reinforcing the argument that the economy is on track for a "soft landing" and that the central bank has successfully managed to tame inflation. Output was up 3% from a year earlier during the three months to the end of June, according to the Bureau of Economic Analysis, up from an initial estimate of 2.8%. Economists had expected the rate to hold steady. In U.S. equity markets, the S&P 500 closed flat yesterday, as weakness among big tech stocks offset gains in the rest of the market.
German inflation fell more than expected in August, reaching the lowest rate since 2021 and paving the way for the European Central Bank to cut interest rates in September. The harmonized annual inflation (HICP) rate declined to 2% in August from 2.6% in the previous month. This is lower than the 2.3% forecast by economists and the lowest level since March 2021. European stocks were trading close to record highs yesterday despite the pullback in the U.S. following Nvidia’s earnings. The Stoxx 600 was up 0.6%, trading slightly below record highs seen in May. Germany’s DAX surpassed record highs, rising 0.6%, France’s CAC rose 0.8% as traders were buoyed by a reprieve for cognac producers in a trade war between Beijing and Brussels, and London’s FTSE 100 gained 0.4%.
There’s plenty of data today, with French inflation due at 7:45 a.m., European and Italian inflation later at 10:00 a.m., Indian GDP at 1:00 p.m., followed by Canadian GDP at 1:30 p.m., and finally U.S. personal income and spending also at 1:30 p.m.
**For professional investors only** Any opinions, news, research, analyses, prices, or other information contained in this blog is provided as general market commentary and does not constitute (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. Some of this information may have been provided by third-party sources and, although believed to be reliable, it has not been independently verified and its accuracy or completeness cannot be guaranteed. No representation or warranty, expressed or implied, is made or given by or on behalf of iSAM Securities or its directors or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this blog, and no responsibility or liability is accepted for any such information. As a result, any person acting on any information does so entirely at their own risk. iSAM Securities will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.