In response to official data indicating that the cost of living in the United States climbed at a slower-than-anticipated rate last month, investors have bid up stock prices.
As traders reacted to the report, stocks climbed in the United States, Asia, the United Kingdom, and Europe on Friday morning.
According to the Labor Department, the US consumer price index increased 7.7% in October compared to the same month one year prior.
This represents the lowest annual gain since the beginning of the year.
The result, which is lower than the 8.2% recorded in the previous month, suggests that the US central bank may moderate its aggressive approach to increasing interest rates to combat inflation.
On Friday, the Hang Seng index in Hong Kong rose 7.7%, while the Nikkei in Japan climbed 3% and the Kospi in South Korea rose 3.5%.
The Hang Seng also rose when Chinese official media indicated that travel restrictions for Covid-19 will be relaxed.
This occurred after the S&P 500 benchmark index in New York surged by more than 5.5% and the Dow Jones Industrial Average rose by 3.5%. Simultaneously, the technology-heavy Nasdaq rose 7.35 percent.
Amazon’s stock surged by more than 12%, while Apple’s and Microsoft’s rose by more than 8%, to rank among the most impressive gains.
European share markets rose a little on Friday, but they did not match the advances observed in the United States and Asia.
The FTSE 100 index in London rose 0.4% in early trading following the release of official data indicating that the United Kingdom appeared to be entering a recession.
Between July and September, the GDP contracted by 0.2%, according to the Office of National Statistics.
In the meantime, the US dollar, whose value has soared this year, fell versus key currencies such as the pound and the yen.
The US Federal Reserve boosted its main interest rate to a 14-year high earlier this month.
The action increased the benchmark lending rate to between 3.75 and 4 percent, the highest level since January 2008.
Also this month, the Bank of England increased interest rates from 2.25 percent to 3 percent, the largest increase since 1989, and issued a warning that the United Kingdom faces the longest recession since records began.
A recession occurs when a country’s economy contracts for two consecutive three-month periods, or quarters.
Higher interest rates reduce the likelihood that individuals will invest in expensive purchases such as homes, automobiles, and business expansion. In turn, this decline in demand is anticipated to restrain price increases.
Due in part to the Ukraine conflict, food, and energy costs have increased, causing hardship for many people around the world and beginning to weigh on the global economy.
However, other analysts are afraid that increasing interest rates could spark a worldwide economic recession.
