European Stocks and US Inflation Data in Focus
The German Dax index started the trading day on a positive note, with a 0.9 percent increase, reaching approximately 23,860 points by 9:30 am. Market analysts are optimistic about the market’s prospects, citing the possibility of a new rally driven by the upcoming US inflation data and the potential for further interest rate cuts in the United States.
CMC Markets’ Chief Market Analyst, Jochen Stanzl, believes that the Dax has formed a solid base over the past two and a half weeks, which could lead to a continued bull market over the summer. He also notes that the upcoming US inflation data, set to be released in the afternoon, could have a positive impact on the market, potentially pushing the Dax above the 24,000 mark.
Investors are pinning their hopes on a new rally, fueled by expectations of interest rate cuts in the US, declining bond yields and a series of positive news in trade policy. The prospect of an expansionary fiscal policy in Germany is also boosting sentiment in the stock market.
In the US, the focus is on the inflation and interest rate landscape, with the personal consumption expenditures (PCE) index expected to show its weakest value in years, potentially confirming market expectations of two interest rate cuts by the end of the year. A third rate cut is also seen as a possibility, although not as certain.
Economic data from the US suggests that the country’s economy is slowing, but a recession is still not in sight. “This is a perfect scenario for stocks: the economy is not weakening and there’s still a chance of further interest rate cuts” Stanzl said.
The euro was slightly stronger against the US dollar, trading at 1.1708, while the dollar was valued at 0.8541 euros.