The Federal Reserve has been widely expected to cut interest rates at its meeting next week, but there is debate about whether the central bank will signal likely additional cuts in 2025.
The US producer price index (PPI) dipped 0.1% on a month-on-month basis, according to Department of Labor data – when analysts had expected a 0.3% increase.
The producer data suggests “muted” inflation impact from tariffs and that “businesses are absorbing at least part of tariff costs,” said a note from FHN Financial’s Will Compernolle. “Nothing in today’s data should sway the Fed from cutting rates next week.”
Markets are also currently betting on additional Fed rate cuts in October and December. But those moves are considered less certain and could be influenced by Thursday’s consumer price data.
Fed policy makers have lately described the state of the job market as more pressing than inflation.
Elsewhere, Tokyo’s stock market ended at an all-time high, as did Seoul where South Korean traders were hopeful the government will not implement plans to lower the capital gains tax threshold for stocks.
In Europe, the Paris CAC 40 ended the day with a slight gain as a new prime minister took office in France.
President Emmanuel Macron on Tuesday appointed Sebastien Lecornu as prime minister, one day after his predecessor Francois Bayrou lost a confidence vote in parliament over planned austerity measures to reduce France’s debt.
“The failure of… (the) austerity push signals that compromise will be needed, but for now, investors are focusing on the near-term boost to sentiment rather than the longer-term fiscal risks,” noted Joshua Mahony, chief market analyst at Scope Markets.
Oil prices rose moderately as markets eye increased geopolitical risk following Israel’s strike on Qatar targeting Hamas.
Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani told CNN that an unprecedented Israeli strike in Doha targeting Hamas killed hope for Gaza hostages, calling for Israeli leader Benjamin Netanyahu to be “brought to justice”.
Software giant Oracle surged 36% after projecting huge revenue growth in the next few years as it prospers from the artificial intelligence investment boom.
Oracle projected that its cloud business revenues would grow 77% in the current fiscal year to US$18 billion. In subsequent years, revenues are expected to rise to US$32 billion, US$73 billion, US$114 billion, and US$144 billion.