US Fed looks more likely to go for a smaller rate cut as inflation persists: US consumer prices rose 0.2% in August, matching July's increase, while the annual CPI advanced 2.5%, the smallest rise since February 2021, according to Bureau of Labor Statistics figures (pdf). The index grew 0.3% without counting volatile items like food and energy — the most in four months.

The persistent growth points to the likelihood of a smaller rate cut at the Fed’s meeting next week, analysts say. Traders now see an 85% chance of a quarter-point cut next week, according to CME Group’s FedWatch.

Start slow, and upsize later? “The Fed may start rate cuts a lot like how they started the hikes: 25 bps at first and then have the option to upsize the cuts as necessary,” chief economist at Annex Wealth Management Brian Jacobsen told Reuters.

Market reax: US markets exhibited cautious movements following the latest inflation data, dipping slightly before paring gains on the back of a tech rally. The S&P 500 fell 0.3%, before closing up 1.1%, while the Nasdaq rallied 2.17%.

ALSO WORTH KNOWING-

  • UK-based private equity group Intermediate Capital Group closed a EUR 15.2 bn (USD 16.8 bn) European direct-lending fund, the largest of its kind in Europe, providing loans to private-equity backed companies. (Bloomberg)
  • The UK economy stagnated in July, with no growth for the second consecutive month as construction and manufacturing sectors declined. The Bank of England is anticipated to keep interest rates steady at 5% next week, with a potential cut in November. (Financial Times)

THE MARKETS THIS MORNING-

Asian markets tracked Wall Street’s gains, with the Nikkei up 3% and Topix up 2.48% this morning. South Korea’s Kospi also opened up 1.2%, while the small-cap Kosdaq gained 2.5%. Meanwhile, Wall Street futures opened lower.

ADX

9,323

-0.9% (YTD: -2.7%)

DFM

4,346

-0.9% (YTD: +7.1%)

Nasdaq Dubai UAE20

3,756

-1.7% (YTD: -2.2%)

USD : AED CBUAE

Buy 3.67

Sell 3.67

EIBOR

5.1% o/n

4.2% 1 yr

TASI

11,766

-1.8% (YTD: -1.7%)

EGX30

30,486

+1.3% (YTD: +22.5%)

S&P 500

5,554

+1.1% (YTD: +16.4%)

FTSE 100

8,194

-0.2% (YTD: +6.0%)

Euro Stoxx 50

4,764

+0.3% (YTD: +5.4%)

Brent crude

USD 70.61

+2.1%

Natural gas (Nymex)

USD 2.28

+0.4%

Gold

USD 2,542.40

-0.03%

BTC

USD 57,360.4

-0.4% (YTD: +36.1%)

THE CLOSING BELL-

The DFM fell 0.9% yesterday on turnover of AED 388.6 mn. The index is up 7.1% YTD.

In the green: International Financial Advisors (+12.6%), Tecom Group (+2.0%) and Sukoon Ins. (+1.4%).

In the red: Dubai Refreshment Company (-9.8%), Agility The Public Warehousing Company (-5.5%) and National International Holding Company (-5.0%).

Over on the ADX, the index also fell 0.9% on turnover of AED 1.3 bn. Meanwhile Nasdaq Dubai closed down 1.7%

CORPORATE ACTIONS-

Abu Dhabi Ship Building Company tapped Q Market Maker as a liquidity provider for its shares, the company stated in an ADX disclosure (pdf).

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