European and Asian shares surged on Wednesday as US markets set new highs on data showing a small improvement in U.S. inflation last month. Tokyo’s benchmark Nikkei 225 broke the record it had set the day before. The Dow Jones Industrial Average’s future on Wall Street remained almost unchanged, but the S&P 500’s was up 0.2%.
Relief over a protracted truce in President Donald Trump’s trade conflict with China and lingering expectations that the Federal Reserve will lower interest rates have contributed to a recent surge in share prices. The consumer price index’s reduction in July served to support them.
In a statement, Stephen Innes of SPI Asset Management stated, “Asia woke up in full risk-on mode, riding the coattails of a US session that looked like someone hit the ‘infinite bid’ button after CPI didn’t blow the inflation doors off.”
To give themselves more time to negotiate a comprehensive trade agreement, China and the US decided to extend their halt in significantly higher tariff rates on each other’s exports by 90 days, starting on August 12. The truce has reduced pressure on businesses and nations around Asia that mostly depend on supply chains that pass through China, even if it is still unclear what the discussions will produce.
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