US stock markets ended the day with mixed results. In New York, the Dow Jones closed at 49,761 points, marking a slight gain of 0.1% compared to the previous day. Conversely, the Nasdaq 100 dropped 0.9% to hit 29,065 points, while the broader S&P 500 finished lower, down 0.2% at 7,401 points.
The poor sentiment on Wall Street was mainly driven by US inflation data for April, released in the morning. The annual inflation rate climbed from 3.3% to 3.8%, a rise higher than many had anticipated. Initially, the markets fell following the numbers, though equity prices later experienced some recovery.
According to Thomas Gitzel, chief economist at VP Bank, inflation makes discussions about interest rate cuts unlikely. “Even with today’s figures, debates over rate cuts are probably shelved” he stated. While designees for central bank presidency suggest rate reductions, he added that the current inflation trend necessitates shelving those plans for now.
Gitzel pointed out that continued increases in inflation are inevitable, citing sustained tensions in global energy markets. For the month, energy prices rose by 3.8%, accounting for nearly 40% of the month-over-month inflationary increase. Furthermore, rents showed a noticeable increase, contributing to the core inflation rate rising to 2.8%, exceeding expectations.
The economic monitor also noted the political implications of inflation, suggesting that rising costs negatively impact Donald Trump’s appeal. The US President campaigned on promising to lower inflation, but the opposite is happening: increased energy costs erode the real disposable income of American citizens. The expert noted that President Trump performs particularly poorly when it comes to tackling inflation.
In related commodity and currency movements, the Euro weakened against the Dollar, with one Euro exchanging for $1.1739, making a dollar available for 0.8519 Euros. Gold prices also dropped, settling at $4,714 per fine ounce (-0.5%), corresponding to €129.10 per gram. In contrast, oil prices rose. A North Sea Brent barrel cost $107.90 near German lunchtime, representing a 3.5% increase from the close of the previous trading day.
