Mars Inc. to acquire Kellanova for 36 Billion Dollars US
U.S. economic trends show easing inflation, raising expectations of Federal Reserve rate cuts as the CPI growth slows and PPI cools
United States Economic Data
The U.S. economic trends show signs of easing inflation, fueling expectations of Federal Reserve interest rate cuts. The latest consumer price index (CPI) report showed a 0.2% monthly increase in July, with core inflation also rising by 0.2%. This brings the year-over-year core CPI increase to 3.2%, the slowest since early 2021. Despite this, there are mixed signals, such as a slight uptick in shelter costs. The producer price index (PPI) also indicated a cooling trend, with a notable drop in service costs, the largest in nearly 1.5 years.
Market expectations are leaning towards a 25 basis point (bps) rate cut by the Fed in September, though some economic experts speculate on the possibility of a 50 bps cut depending on upcoming data. Two-year Treasury yields have dipped below 4%, and the 10-year yield is around 3.85%, reflecting the market’s anticipation of easing monetary policy. The S&P 500 has gained 1% recently, and futures are indicating a continued positive trend.
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Europe Economic Trends
In Europe, the economic landscape remains mixed. The Eurozone’s second-quarter GDP growth matched expectations at 0.3%. Despite this, the region faces ongoing challenges with inflation and economic performance. In the UK, inflation rose slightly to 2.2% annually, after hitting the Bank of England’s 2% target for two consecutive months. This marginal increase was less than expected, but it reflects persistent inflationary pressures, particularly in the services sector.
European markets responded positively to this data, with France’s CAC 40, Germany’s DAX, and Britain’s FTSE 100 each rising by 0.3%. The euro has strengthened against the dollar, reaching its highest level this year at $1.1034.
Asia and Global Markets
Asian markets displayed varied performance. Japan’s Nikkei 225 rose by 0.6% to 36,442.43, supported by speculation over new political leadership and steady economic fundamentals. South Korea’s Kospi gained 0.9% to 2,644.50, while Australia’s S&P/ASX 200 increased by 0.3% to 7,850.70. In contrast, China’s stock economic indicators underperformed, with the CSI 300 index falling nearly 1%, the lowest in six months, driven by concerns over weak lending data and broader economic instability.
In New Zealand, the Reserve Bank surprised markets by cutting interest rates for the first time in over four years, citing a return of inflation towards target levels. This unexpected move has global implications, particularly for other inflation-targeting central banks.
Corporate Earnings and Developments
The earnings season brought mixed news for global corporations. Apple supplier Foxconn reported a 6% rise in quarterly net profit, driven by strong demand for AI servers. Meanwhile, Alphabet (Google) faces potential antitrust action from the U.S. Department of Justice, which could lead to the company being broken up. UBS outperformed expectations with a $1.14 billion net profit in Q2, boosting its stock by nearly 2%.
In mergers and acquisitions, Mars Inc. announced a $36 billion deal to acquire Kellanova, a significant transaction in the consumer goods sector. Additionally, Southwest Airlines saw a 1.4% increase in its stock after Elliott Investment Management initiated a proxy fight to replace its board, reflecting dissatisfaction with the airline’s performance.
Commodities and Currency Markets
In commodities, West Texas Intermediate (WTI) crude oil rose by 0.4% to $78.69 per barrel, while Brent crude saw a slight decline to $80.52 per barrel. The U.S. dollar showed modest gains against the yen, trading at 146.89 yen per dollar. Meanwhile, the euro gained strength, rising to $1.1034. In the cryptocurrency market, Bitcoin increased by 0.6% to $60,924.88, and Ether rose by 0.8% to $2,720.67.
Summary of Key Economic Indicators
S&P 500 Futures: +0.2%
10-Year Treasury Yield: 3.85%
Euro: $1.1034
West Texas Intermediate Crude: $78.69 per barrel
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