The market awaits the US CPI, European stocks opened higher collectively, US stock futures fluctuated narrowly, and spot gold slightly declined

Global markets hold their breath as investors focus on the key U.S. inflation data to be released at 20:30, which is seen as the last critical data influencing the Federal Reserve's interest rate decision next week. Yesterday, the unexpectedly weak PPI fueled the market's debate on larger rate cuts.

On Thursday, major European stock indices opened higher collectively, with the Euro Stoxx 50 index up 0.15%. S&P 500 and Nasdaq 100 futures gave back earlier gains. Japanese and South Korean stock markets closed higher, setting new closing highs. The dollar rose against the yen in the short term, gaining 0.12% during the day.

In the commodities market, gold slightly declined after rising in the previous trading session. Oil prices also retreated after three consecutive days of increases.

• Major European stock indices opened higher collectively. The Euro Stoxx 50 index rose 0.15%, the UK FTSE 100 index rose 0.33%, the French CAC 40 index rose 0.26%, and the German DAX 30 index rose 0.11%.

• S&P 500 futures were virtually unchanged.

• The Nikkei 225 index closed up 1.2% at 44,372.50 points, while the Tokyo Stock Exchange index rose 0.2% to 3,147.76 points. The South Korean Seoul Composite Index closed up 0.9% at 3,344.15 points.

• The dollar rose against the yen in the short term, gaining 0.12% to 147.648. According to Kyodo News, Takashi Sawa told former Prime Minister Fumio Kishida that she would run for the presidency of the Liberal Democratic Party.

• The yield on the 10-year U.S. Treasury bond changed little at 4.05%.

• Spot gold fell 0.3% to $3,629 per ounce.

• West Texas Intermediate crude oil fell 0.3% to $63.48 per barrel.

• Bitcoin rose 0.6% to $114,300.45.

CPI Data in Focus, Market Bets on Rate Cut Path

Currently, all market attention is focused on the U.S. CPI data to be released later on Thursday. Market estimates suggest that the core CPI, excluding food and fuel, may rise 0.3% in August for the second consecutive month. If the reading is weaker than expected, it could trigger further speculation in the market about a 50 basis point rate cut by the Federal Reserve next week.

Ian Lyngen and Vail Hartman from BMO Capital Markets stated:

“We still stand in the camp of a 25 basis point rate cut. For a half-point cut to become a real possibility, tomorrow's core CPI data needs to show weakness.”

Ulrike Hoffmann-Burchardi from UBS Global Wealth Management believes that the combination of slowing job growth and manageable inflation will keep the Federal Reserve on a rate cut path, expecting a 25 basis point cut in September, followed by three consecutive cuts by January 2026. Additionally, the European Central Bank is expected to keep interest rates unchanged at its meeting later on Thursday Data released on Wednesday showed that the core Producer Price Index (PPI) in the U.S. for August, excluding food and energy, unexpectedly fell by 0.1% month-on-month, far below the market's general expectation of a 0.3% increase, while the July data was also revised down. This data provides strong arguments for the dovish officials at the Federal Reserve.

Neil Dutta from Renaissance Macro Research believes that "the Federal Reserve should cut rates by 50 basis points next week—but I don't think they will," pointing out that hawks will argue that the unemployment rate is still low, financial conditions are loose, and tariffs may bring upward inflationary pressures in the future.

Major European stock indices opened higher, with the Euro Stoxx 50 index rising by 0.15%. S&P 500 and Nasdaq 100 futures gave back earlier gains. Spot gold fell by 0.3% to $3,629 per ounce.

Asian markets mixed, tech stocks shine

After five consecutive days of gains, the Morgan Stanley Capital International Asia-Pacific Index (MSCI Asia-Pacific) performed flat on Thursday. Japanese and South Korean indices rose, while the Australian index fell.

Tech stocks became the highlight of the Asian market. Due to its major holding company Arm Holdings' stock price rising during the New York trading session, SoftBank Group in Japan surged by about 10%, reaching a new high. South Korean chip manufacturers TSMC and SK Hynix also saw their stock prices rise. Alibaba turned positive after an early decline, as the company seeks to raise $3.17 billion through the issuance of zero-coupon convertible bonds, which is expected to become the largest such transaction this year.