Optimism Returns to Markets After Promising US Inflation Data

Global stock indices edged higher on Wednesday as investors reacted to highly anticipated US inflation data that showed a further slowdown in consumer price increases in the world’s largest economy. The report reinforced the recent trend of disinflation – albeit at a moderate pace – and brought a relative sense of calm to markets still reeling after last week’s meltdown.

A graph showing the recent trend in US inflation

In Dublin, the Iseq index slipped 0.4 per cent amid low trading volumes. Glanbia suffered the biggest decline, falling 8.5 per cent to €16.45 per share after the Kilkenny-based food group reported lower revenue and profits for the six months to the end of June.

Banking stocks were mixed with AIB dropping 0.5 per cent to €5.03 per share while PTSB tumbled 2.9 per cent to €1.50. Bank of Ireland, meanwhile, advanced by 0.6 per cent to €5.03.

Ryanair also lost ground, shedding 1.3 per cent to €14.80 as part of a wider move by airlines globally after a number of carriers cancelled flights to the Middle East where regional tensions continue to mount.

Moving up the index, insulation maker Kingspan added 1 per cent to €81.60 per share while Kerry Group was almost 0.9 per cent improved on the session at €88.15.

UK Markets React to Inflation Data

Britain’s benchmark FTSE 100 index gained 0.5 per cent after data showed British inflation rose less than expected in July. The mid-cap FTSE 250, meanwhile, advanced by 0.8 per cent as shares in Playtech surged 14.3 per cent.

An image of the London Stock Exchange

The firm’s move was spurred by Paddy Power owner, Flutter’s confirmation that it is in talks to acquire the group’s Italian arm for €2.33 billion. Flutter’s London-listed shares climbed 10.5 per cent to the top of the index after the Playtech announcement and following Tuesday’s bumper half-year results announcement, its first since moving its main listing to New York.

On the benchmark index, meanwhile, UK homebuilders jumped as the latest data on inflation in Britain fuelled further hopes of declining mortgage rates and increased demand for new houses. Persimmon, Taylor Wimpey and Barratt Developments all advanced by between 3.4 per cent and 3.8 per cent with JPMorgan retaining overweight ratings on the stocks.

European Markets

Holding on to Tuesday’s gains, the blue-chip Stoxx 50 index advanced by 0.6 per cent while the cross-Continent Stoxx 600 moved 0.4 per cent higher, supported by UBS Group. The Swiss lender rose after it reported a second quarter net profit of $1.1 billion, above analysts’ expectations.

An image of the European Central Bank

Luxury stocks sparkled with Hermes ahead on the session by 1.8 per cent while Luis Vuitton owner, LVMH, jumped 1.5 per cent.

Straumann soared 11.3 per cent after the Swiss dental implant maker announced the sale of its DrSmile aligner business and also raised its full-year outlook.

US Markets

Wall Street’s main indices were mixed on Wednesday with the Nasdaq Composite, the Dow Jones Industrial Average and the S&P 500 all ahead by between 0.4 per cent and 0.5 per cent by closing bell in Dublin.

An image of the New York Stock Exchange

Alphabet slipped 3.6 per cent after a media report said the US department of justice is considering options that include breaking up the online search engine. Losses in Alphabet weighed on the Nasdaq and pulled the communication services sector down 1.3 per cent, the most among the 11 big S&P 500 sectors.

Flutter’s New York-listed shares, meanwhile, jumped by more than 8 per cent after the Playtech announcement.

AI stocks Nvidia, Super Micro and Dell reversed early gains after staging a strong recovery this week, while most megacap and growth stocks were mixed.

Kellanova surged over 7.7 per cent after family-owned sweets and snacks giant Mars said it would buy the Cheez-It and Pringles maker in a nearly $36 billion deal.

Cardinal Health gained 5.2 per cent after the drug distributor raised its 2025 profit forecast.

Conclusion

The latest US inflation data has brought a sense of calm to markets, with global stock indices edging higher. While some stocks have suffered declines, others have made significant gains. As the market continues to react to the data, it remains to be seen how the rest of the week will play out.