Key facts
- US producer prices were unchanged in July, reducing expectations for further Federal Reserve rate hikes.
- The S&P 500 reached a new high, and other major indices also saw gains.
- Gold prices saw renewed investor interest due to uncertainty around US rate outlook and geopolitical tensions.
- Britain's economy experienced unexpected growth in June, contributing to a 0.4% rise in Q2 GDP.
- Federal Reserve officials expressed differing views on the need for further rate hikes.
Stocks and bond prices advanced on Thursday, with the S&P 500 reaching a fresh record high, as investors reacted positively to U.S. inflation data that suggested the Federal Reserve may not need to raise interest rates further.
The producer price index (PPI) for July remained unchanged, further diminishing the likelihood of additional rate hikes. This benign inflation snapshot has led markets to price in a potential rate hike only by December.
Federal Reserve officials offered mixed signals. Cleveland Fed President Beth Hammack reiterated her view that rates should be increased, while Richmond Fed President Thomas Barkin suggested that inflation might be naturally declining due to a vulnerable labor market. Despite these differing opinions, market sentiment remained buoyant, with both stocks and bonds showing gains.
Gold experienced a revival, drawing investors back due to uncertainty surrounding the U.S. rate outlook, the Federal Reserve's independence, and escalating tensions between the U.S. and Iran. Central banks are noted as a key group increasing their investment in gold.
In corporate news, OpenAI's chief revenue officer, Denise Dresser, is departing the company after less than a year. She will be succeeded by Dali Rajic, who joins from Wiz.
Britain's economy showed unexpected growth in June, with GDP increasing by 0.4% in the second quarter. This performance positions the UK for its strongest growth in the G7 during the first half of the year, though future growth is projected to moderate.