Stock Market Update

Equity futures are modestly higher this morning following yesterday's record-setting session that saw the S&P 500 and Nasdaq Composite notch all-time intraday and closing highs. 

The stock market responded enthusiastically to the July CPI report, which was largely in line with expectations. While there were some goods indexes that exhibited a tariff-related inflation in prices, the headline numbers came in as expected, which was better than what was feared. 

Interest rate cut expectations increased in response, with three cuts before the end of the year now a strong probability. 

Treasury Secretary Scott Bessent suggested in an interview that the Fed should cut rates by 50 basis points at the next meeting, according to Fox Business.

Macro headlines are quiet this morning, meaning the market will largely be left to its own devices as it tries to expand upon yesterday's rally. 

On the geopolitical front, Politico reports that President Trump will speak with European leaders today ahead of his meeting with Russian President Vladimir Putin on Friday. 

In corporate news:

• The U.S. is putting trackers in AI chips to deter illegal diversions to China, according to Reuters.
• CAVA Group (CAVA 84.50, -20.46, -24.2%) beat EPS expectations by $0.02, missed revenue expectations, and lowered FY25 same-restaurant sales guidance. 
• Eli Lilly (LLY 639.43, +7.57, +1.2%) introduced its Mounjaro pen in India, according to Reuters. 

Reviewing overnight developments:

Equity indices in the Asia-Pacific region ended Wednesday on a mostly higher note. Japan's Nikkei: +1.3%, Hong Kong's Hang Seng: +2.6%, China's Shanghai Composite: +0.5%, India's Sensex: +0.4%, South Korea's Kospi: +1.1%, Australia's ASX All Ordinaries: -0.5%.

In news:

• Japan launched an anti-dumping probe into steel products from China and South Korea.
• Developer Evergrande will be delisted from the Hong Kong Stock Exchange on August 22.
• Japan sold 5-yr JGBs to soft demand.
• Australia's wage data for Q2 showed a deceleration in the pace of growth.
• India's Prime Minister Modi is likely to speak with President Trump on the sidelines of the UN meeting in September.

In economic data:

• China's July New Loans -CNY50.0 bln (expected +CNY305.0 bln; last CNY2.240 trln). July Outstanding Loan Growth 6.9% yr/yr (expected 7.0%; last 7.1%) and July total social financing CNY1.16 trln (expected CNY1.50 trln; last CNY4.20 trln)
• Japan's July PPI 0.2% m/m, as expected (last -0.1%); 2.6% yr/yr (expected 2.5%; last 2.9%). August Reuters Tankan Index 9 (last 7). July Machine Tool Orders 3.6% yr/yr (last -0.5%)
• South Korea's July Unemployment Rate 2.5% (last 2.6%)
• Australia's Q2 Wage Price Index 0.8% qtr/qtr, as expected (last 0.9%); 3.4% yr/yr (expected 3.3%; last 3.4%). June Home Loans 2.4% m/m (last -1.8%)
• New Zealand's July Electronic Card Retail Sales 0.2% m/m (last 0.5%); 1.7% yr/yr (last -0.3%

Major European indices trade in the green. STOXX Europe 600: +0.4%, Germany's DAX: +0.7%, U.K.'s FTSE 100: +0.1%, France's CAC 40: +0.5%, Italy's FTSE MIB: +0.6%, Spain's IBEX 35: +0.9%.

In news:

• Final July CPI readings from Germany and Spain were in line with expectations and Germany's economy minister said that domestic inflation is likely to remain stable for the remainder of the year.
• The British government is looking to tighten rules surrounding inheritance transfers, aiming to generate about GBP1.5 bln in annual revenue by 2029.
• British homebuilder Persimmon reported solid results for the first half of 2025 and issued cautious guidance.

In economic data:

• Germany's July CPI 0.3% m/m, as expected (last 0.0%); 2.0% yr/yr, as expected (last 2.0%). July Wholesale Price Index -0.1% m/m (expected 0.2%; last 0.2%); 0.5% yr/yr (last 0.9%)
• Spain's July CPI -0.1% m/m, as expected (last 0.7%); 2.7% yr/yr, as expected (last 2.3%). July Core CPI 2.3% yr/yr, as expected (last 2.2%)