Signs that inflation is moderating helped to ease concerns over an earlier-than-expected asset tapering by the Fed
Wall Street indexes were mostly higher overnight, with banks and industrial companies leading the gains while health care was the only sector to fall. The S&P 500 index rose 0.25%, the Dow gained 0.6%. Both indexes also set all-time highs on Friday and Tuesday. Meanwhile, weakness in some technology stocks pulled the Nasdaq Composite 0.16% lower.
Asian shares were mixed Thursday as caution set in among investors, with worries in the region remaining about the recent regulatory crackdown in China. On the positive side, signs that U.S. inflation is moderating helped to ease concerns over an earlier-than-expected asset tapering by the Federal Reserve. As such, Japan’s benchmark Nikkei 225 gave up 0.2%, South Korea’s Kospi shed 0.32%, Australia’s S&P/ASX 200 added less than 0.1%, while the Shanghai Composite in China shed 0.13%.
In Europe, stocks were mixed on Thursday, as lingering concerns over global virus cases overshadowed gains in the US after the latest inflation report. The pan-European Stoxx 600 hovered around the flat-line in early trade.
Meanwhile, the dollar retreated from fresh multi-week highs as US inflation has moderated in July. However, the overall demand for the dollar continues to persist, with downside risks for the euro prevailing. EURUSD derived support from the 1.1700 area on Wednesday to bounce slightly eventually. However, the common currency lacks the recovery momentum, struggling to overcome the 1.1750 intermediate resistance. The major now awaits the US PPI and jobless claims data for fresh trading impulse.
In other markets, oil prices continued to recover from local lows set at the beginning of the week. Brent crude climbed to the $71.70 area earlier on Thursday before turning marginally negative on the day. The futures now need to overcome the 20-DMA, today at $72. As long as the prices stay below this level, the upside potential looks limited.