Trade and Inflation News Boost Stocks

US index futures are climbing again today with gains of around 0.4% for the three main contracts. Overnight, President Trump announced another 90-day delay to the imposition of tariffs on China to allow talks to continue. This was particularly well received in Japan, where the Nikkei rallied 2.1%, while the Hang Seng gained 0.3%. This morning in Europe, the DAX is down 0.4% and the FTSE is flat.

Stocks have been climbing since the announcement of US inflation numbers, but this feels a bit like bulls grasping at straws, because the news was mixed. While headline US CPI beat expectations by not rising, it also didn’t fall (2.7% vs Street 2.8% and previous 2.7%), and US Core CPI, excluding food and energy, was worse than expected and increased (3.1% vs street 3.0% and previous 2.9%).  Producer prices may add to the inflation story on Thursday, while Friday’s US retail sales report may give more colour on consumer spending.

Gold is hanging around $3,400/oz down 0.15% on reports that there may not be tariffs on bullion after all. Commodities are mixed with Copper up 1.0% and Crude Oil down 0.6%. The Pound is up 0.6%, while the Australian Dollar has clawed back previous losses after the Reserve Bank of Australia announced an expected 0.25% interest rate cut and signalled the potential for more rate cuts.   

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