U.S. stocks moved higher, snapping a two-day losing streak, after the release of employment and inflation economic data. The Standard and Poor’s 500 index added 29.62 points, or 1.49%, to trade at 2,023.86. The Dow Jones Industrial Average rose 217 points, or 1.28%, to trade at 17,141.75 and the Nasdaq Composite gained 87.25 points, or 1.82%, to trade at 4,870.1. U.S. consumer prices have made their biggest drop in eight months as the cost of gasoline declined. However, other goods and services have registered a steady pick-up in prices, suggesting the inflation is likely on the rise. Overall, the consumer price index (CPI) fell 0.2% in August after falling 0.1% in August. However, when excluding food and energy, prices have risen last month by nearly 2% after a similar hike in August. Regardless, the Federal Reserve’s target-2% growth in inflation is missed by a wide margin. Regarding employment, Thursday’s initial jobless claims report shows that the number of new applicants for unemployment support has been reduced to a 42-week low. The combination of a healthy labor market and steadily rising prices in most goods and services categories could very well pace the way to an interest rate hike this year, although opinions on the matter vary drastically among analysts.
In Europe, shares rallied as they snapped a three-day losing streak as markets perceive the Federal Reserve moving away from an interest rate hike this year. Top officials from the European Central Bank of commented on the matter on Wednesday, stating that a U.S. interest rate hike would likely have unforeseen consequences due to the evolving nature of the global economy and that moving away from a zero-interest rate environment hasn’t been done in this extent before, making the process reliant on trial and error. European stocks have been hit in recent days over the release of disappointing Chinese data, including trade and inflation. The pan-European Stoxx Europe 600 added 1.5% to close the trading session at 360.99. The German DAX 30 also rose 1.5% to close at 10,064.8 after the index was lifted by the euro’s weakness against the dollar. Of the index’s major components, Volkswagen (DE:VOWG) AG dropped 3.6% after Germany ordered a mandatory recall of the company’s diesel models that have been fitted with the controversial software designed to mask the vehicles’ emissions of pollutants. The French CAC 40 gained 1.4% to trade at 4,675.29 and the British FTSE 100 rose 1.1%. The UK benchmark was significantly weighed down by Burberry Group (L:BRBY) PLC, which has seen its share falling 8.3% after the release of disappointing sales figures.
Today’s major economic data releases include Eurozone inflation data and U.S. industrial production. Next week starts with major releases on Monday. Chinese GDP data will be revealed, followed by retail sales and industrial production. The recent economic turmoil in China has created major concerns in global markets, as seen in the volatile reactions to recently released Chinese economic data. Australia’s central bank will release its latest minutes on Tuesday, followed by an interest rate decision by the Bank of Canada. The European Central Bank will hold a meeting on Thursday, announcing any changes to interest rates. However, judging by the central bank’s recent remarks, changes in policy are not likely.