On track for a September rate cut? US inflation fell under the 3% mark in July for the first time since March 2021, strengthening the case for the Federal Reserve to cut interest rates at its next meeting in September. The consumer price index fell to 2.9% last month, down from 3% in June, according to Bureau of Labor Statistics figures (pdf) released yesterday. The figure undercut economists’ expectations that inflation would hold steady at 3%.

Another cue for the Fed to cut rates: The slowdown in price growth should give the Fed “further confidence” that inflation is heading towards its 2% target, JPMorgan Asset Management Chief Global Strategist David Kelly told the Financial Times. “The bottom line is this keeps the Fed on track for 25 basis points in September,” Point72 chief economist Dean Maki told the FT.

What are the odds? CME Group's FedWatch tool sees a 64% chance of a 25 bps rate cut at the Fed's upcoming 17-18 September policy meeting.

Incoming labor data will also play a role in what the Fed does next: “This is now a labor data-first Fed, not an inflation data-first Fed, and the incoming labor data will determine how aggressively the Fed pulls forward rate cuts,” Evercore’s Krishna Guha told Bloomberg, adding that the Fed is looking at the bigger picture rather than plain data.

Remember: The US unemployment rate rose to a near three-year high of 4.3% in July, raising recession fears and concerns that the central bank is behind in cutting interest rates and contributing to a market meltdown that happened a day later.

Market reax: Stock markets rose on the news, with the S&P 500 continuing to rise for a fifth consecutive day, marking its longest winning streak in over a month. The gains echoed across the board, the Nasdaq closed up 0.1% and the Dow Jones rose 0.6%.

ALSO FROM PLANET FINANCE- The biggest transaction of the year: Candy giant Mars will acquire Kellogg spinoff company Kellanova in a USD 36 bn transaction — the largest yet in 2024. (Statement)

MARKETS THIS MORNING-

Asian markets are in the green this morning after better-than-expected growth figures from Japan and inflation figures from the US. The Nikkei is up 0.9% this morning, while the Hang Seng is looking at gains of 0.2% and the Kospi is up 0.9%.

ADX

9,226

+0.6% (YTD: -3.7%)

DFM

4,213

+0.7% (YTD: +3.8%)

Nasdaq Dubai UAE20

3700

+0.3% (YTD: -3.7%)

USD : AED CBUAE

Buy 3.67

Sell 3.67

EIBOR

5% o/n

4.6% 1 yr

TASI

11,850

+0.5% (YTD: -1%)

EGX30

29,567

+0.8% (YTD: +18.8%)

S&P 500

5,455

+0.4% (YTD: +14.4%)

FTSE 100

8,281

+0.6% (YTD: +7.1%)

Euro Stoxx 50

4,728

+0.7% (YTD: +4.6%)

Brent crude

USD 77.35

+0.5%

Natural gas (Nymex)

USD 2.23

+0.3%

Gold

USD 2,486

+0.2%

BTC

USD 58,968

-3.4% (YTD: +39.8%)

THE CLOSING BELL-

The ADX rose 0.6% yesterday on turnover of AED 964.7 mn. The index is down 3.7% YTD.

In the green: Rak Co. for White Cement and Construction Materials (+3.9%), Hayah Insurance Company (+3.3%) and Emirates Stallions Group (+2.6%).

In the red: E7 Group Warrants (-6.8%), Alef Education Holding (-6.1%) and E7 Group (-3.7%).

Over on the DFM, the index rose 0.7% on turnover of 203.8 mn. Meanwhile, Nasdaq Dubai rose 0.03%.

CORPORATE ACTIONS-

Watania International Holding appointed Al Ramz Capital as liquidity provider for its listed shares on the DFM after receiving regulatory approval, according to a bourse disclosure (pdf).

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