Nasdaq surges above 20,000 after US inflation data matches estimates

The Nasdaq piled on almost 2% to close above 20,000 points for the first time. Photo / 123RF

American and European stock markets mostly rose on Wednesday (US time) after inflation data cemented expectations that the US Federal Reserve will trim interest rates next month.

While the Dow fell slightly, the other two major US indices advanced, led by the tech-rich Nasdaq, which piled on almost 2% to close above 20,000 points for the first time.

The consumer price index (CPI) rose to 2.7% last month from a year ago, up slightly from 2.6% in October.

“With the CPI numbers broadly in line, it is likely that the Fed will not be derailed and will cut rates again next week,” Jochen Stanzl, chief market analyst at CMC Markets.

“The data is not a show-stopper for the current bull run on Wall Street,” he added.

Ahead of the data, investors priced in an 86% chance the Fed will cut interest rates next week by a quarter percentage point. That rose to more than 98% after the CPI data was published.

Stocks in Paris and Frankfurt rose ahead of the European Central Bank’s own interest rate announcement on Thursday, with analysts expecting another cut as it seeks to boost Eurozone growth.

Investors are also eyeing political developments in France, where officials said French President Emmanuel Macron aims to name a new prime minister “within 48 hours” as he seeks to end political deadlock following the ouster of Michel Barnier.

In company news, shares in German retail giant Zalando shed more than 4% on Frankfurt’s DAX index, after it acquired domestic rival About You in a deal worth around €1.1 billion (US$1.2 billion).

Shares in Zara owner Inditex slid more than 6% after a record quarterly profit for the group fell short of market estimates.

Among US companies, Google parent Alphabet earned 5.5% as it announced the launch of Gemini 2.0, its most advanced artificial intelligence model to date. That added to gains after Google also announced Tuesday details of a breakthrough quantum chip.

Shares in Shanghai rose but Hong Kong gave up an early rally to end in the red.

Traders were keeping tabs on China to see if it will announce further measures to support its struggling economy as leaders were to gather Wednesday for a conference to hammer out next year’s agenda.

Chinese President Xi Jinping and other top leaders on Monday announced their first major shift in policy for more than a decade, saying they would “implement a more active fiscal policy and an appropriately relaxed” strategy.

Those remarks sparked hopes for more interest rate cuts and the freeing up of more cash for lending.

– Agence France-Presse