Author: Shannon Hannes
Reports indicate that inflation appears to be slowing down this month more than it did in July. The good news is that inflation continues to decline, reaching a four-decade high of 9.1 percent in June before falling to 8.5 percent in July.
After benchmarks finished at a three-month high on Wall Street, putting a smile on investors’ faces, it looks that shares advanced on Thursday, in Asia.
While Tokyo’s stock market was closed for a vacation, more than 1% of advances were recorded in Shanghai, Seoul, and Hong Kong.
Additionally, while oil prices declined, the U.S. futures somewhat increased.
What does Slower Inflation mean for the U.S. Stock Exchange?
The S&P 500 increased by 2.1 percent as investors bet the Federal Reserve could scale down its interest rate increases due to sluggish inflation.
The stock market is also led by cryptocurrency, technology companies, and other investments that have been among the worst losers of the year due to Federal Reserve interest rate hikes.
What’s happening with Asian Shares?
Overall, the pandemic that decimated the country’s crucial tourism industry has had a devastating impact on the economy of South Asia. However, it appears it might be regaining its footing.
For instance, Thailand’s SET increased by 0.4 percent following an earlier increase of 0.25 percentage points to 0.75 percent by the central bank of the nation’s benchmark interest rate.
How is it looking for the U.S. Stock Market?
The S&P 500 moved from around 87.77 points to 4,210, reaching its highest position since early May. From its mid-June low, it has already risen by about 15%.
The Nasdaq Composite, whose several expensive-looking, high-growth stocks have been significantly exposed to interest rate changes, also increased 2.9 percent to 12,840. It has increased by more than 20% since June.
Additionally, the Dow Jones Industrial Average rose by 1.6 percent to 33,309.
The two most prominent winners of the day were technology stocks and cryptocurrencies; the two stocks hit the hardest this year. The price of bitcoin increased by 2.2 percent to slightly under $24,000.
What is the Prediction for Inflation?
Lower costs for gasoline and oil in July helped to restrain inflation. However, removing that and the erratic price of food, so-called “core inflation” remained constant at 5.9 percent for the entire month of July instead of rising as projected by economists. Also, the data prompted traders to delay placing bets on how much the Federal Reserve will increase interest rates at its upcoming meeting.
Higher interest rates typically reduce the price for everything from stocks to goods to cryptocurrency. Interest rates assist in determining where prices would move in the financial sector.
Other reports this week will illustrate how wholesale inflation is faring and whether the American people will need to lower their expectations for future inflation.
Concerns of a recession have grown as people and businesses worldwide are being squeezed by the highest inflation in more than forty years.
The Federal Reserve will receive a couple more eagerly awaited reports before making its next announcement regarding interest rates on September 21.
Key takeaway
Asian markets appear to be gaining ground and recovering from the pandemic’s devastation. Asian stocks gained on Thursday, which could bode well for investors. On the other hand, equities in the United States appear to be performing well, particularly technology stocks and cryptocurrency. In addition, inflation in the United States seems to be decreasing, falling from 9.1 percent in June to 8.5 percent in July. This month, it appears that it may fall even further depending on the Fed’s decision on interest rates. More reports this week will demonstrate whether you and your family should expect commodity prices to fall, among other factors.