European equity indices closed mostly lower as traders wrapped up the session, with France's CAC 40 leading the declines and no new record closes recorded. An in-line July U.S. CPI report then lifted U.S. stocks and pulled Treasury yields down as traders trimmed bets on a September Fed rate hike.
European indices close mostly lower
France's CAC 40 fell 0.46% to 8,674.95, leading the region's declines as London and European traders headed for the exits. Germany's DAX dropped 0.17% to 26,346.30. The UK's FTSE 100 slipped 0.10% to 10,833.16.
Spain's Ibex eased 0.05% to 20,204.39. Italy's FTSE MIB was nearly flat, down 0.01% at 53,698.65. Benchmark 10-year yields in Germany, France and Italy edged lower, while UK and Spanish yields ticked modestly higher.
Cooler CPI lifts U.S. stocks, eases rate-hike bets
The session's main event was the July U.S. CPI report, which came in largely as expected but showed another modest improvement in annual inflation. Headline CPI rose 0.1% month over month, rebounding from June's 0.4% decline. The year-over-year rate eased to 3.4% from 3.5%.
Core CPI rose 0.2% on the month. Its annual pace eased to 2.5% from 2.6%, the lowest since February. Housing costs stayed firm, with owners' equivalent rent and primary rent both rising 0.3%, while energy prices fell 1.5%, including a 2.9% drop in gasoline.
The report did little to strengthen the case for a September rate hike: markets are now pricing around a 40% probability of a September Fed hike, down from 44% ahead of the release. That pulled the 2-year Treasury yield down 2.7 basis points to 4.191%.
U.S. stocks traded higher as European desks closed out, led by technology. The Nasdaq 100 gained 0.72% to 29,736.59. The S&P 500 added 0.19% to 7,742.51. The Dow was little changed, up 0.02% at 53,807.37.
Dollar mixed, gold gains on softer rate outlook
The dollar was modestly lower but mixed after earlier declines fizzled. EURUSD was little changed, down 0.03% near 1.1537. GBPUSD ticked up 0.01% to 1.3506. Gold was one of the bigger beneficiaries of the softer rate outlook, rising around $50 to $4,421 and moving back above its 100-day moving average at $4,393.19.
That keeps the focus on gold's 200-day moving average at $4,485.55 as the next upside target.
Source: Investinglive
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