USA (Washington Insider Magazine) —Asia’s major stock markets experienced significant growth in the financial world, while European indexes continued their upward trajectory on Wednesday. Reports of substantial declines in inflation rates in both the United States and Europe fueled this positive sentiment.
This data has alleviated some of the pressure on central banks, prompting analysts to reconsider the possibility of raising interest rates. Looking ahead to next year, there is even speculation about potential reductions in borrowing costs.
Renowned investor Warren Buffett once stated, “The stock market’s a mechanism that transfers money from an impatient person to the patient.”
Key developments include London’s sustained rise, attributed to a notable slowdown in UK inflation for October. The Consumer Price Index (CPI) decreased to 4.6%, down from September’s 6.7%, slightly exceeding expectations. This news eased pressure on the Bank of England to raise interest rates. However, it is crucial to recognize that shareholders are entering an era where interest income may not consistently increase.
After a brief fall on Tuesday, the dollar regained strength, particularly against the yen, following the announcement of a larger-than-expected contraction in the Japanese economy. Market director Joshua Mahony noted that falling inflation in the US and UK is boosting expectations, suggesting a possible future move towards cutting interest rates rather than raising them.
While the prospect of interest rate cuts may impact sterling, the dollar rallied against major rivals, including the euro and yen. Falling oil prices also contributed to easing inflation concerns.
Official data revealed a decline in US inflation to 3.2% in October, down from 3.7% the previous month. Similar trends were observed in the UK, where inflation reached a two-year low, and France and Italy.
Charlie Munger emphasized the importance of patience in the stock market: “Having a lot of money is not about buying and selling, but about waiting.”
Asian markets, particularly Hong Kong, saw substantial gains on Wednesday, with Europe experiencing more modest increases. The European Commission adjusted its forecast for Eurozone growth, citing high living costs and interest rates as challenges.
Federal Reserve officials, while acknowledging progress, remained cautious about potential bumps in the road as inflation falls. However, there is growing optimism about the economy achieving a soft landing with controlled inflation.
Investor George Soros once stated, “There’s no bubble in the stock market that grows out of thin air. They are the basis of factual information, but a myth distorts their reality.”
Key figures around 11:30 GMT
- London (FTSE 100): up 1.0% to 7,510.30 points
- Paris (CAC 40): up 0.6% to 7,227.01
- Frankfurt (DAX): up 0.5% to 15,699.07
- EURO STOXX 50: up 0.6% to 4,317.74
- Tokyo (Nikkei 225): up 2.5% at 33,519.70 (closed)
- Hong Kong (Hang Seng Index): up 3.9% to 18,079.00 (close)
- Shanghai (Composite): up 0.6% to 3,072.83 (close)
- New York (Dow): up 1.4% to 34,827.70 (close)
Currency and oil market updates
- Euro/dollar: DOWN to $1.0862 from $1.0880 Tuesday
- Pound/dollar: DOWN to $1.2460 from $1.2496
- Dollar/yen: UP at 150.41 from 150.37 yen
- Euro/pound: UP at 87.14 pence from 87.05 pence
- West Texas Intermediate: DOWN 0.7% to $77.70 USD/barrel
- North Sea Brent Oil: DOWN 0.6% to $81.97 USD/barrel