Global stocks rise as market bets on better US inflation data

NEW YORK, United States — Global stock markets mostly rallied Wednesday as investors were buoyed by optimism over China's reopening and upcoming data expected to show a further slowdown in US inflation.

Analysts have also cited a better outlook on the European economy, with more temperate weather easing worries of an energy shock following policy actions designed to minimize dependence on Russia.

"An upside bias is winning out thus far based on a prevailing view that weakening economic activity and fading inflation will help the Fed realize that it does not need to raise rates much further," market analyst Patrick O'Hare at Briefing.com said.

After Asian equities mainly fizzed higher, in Europe, Frankfurt closed 1.2 percent up, Paris gained 0.8 percent and London added 0.4 percent.

Wall Street followed that trend to end higher as well, with the S&P 500 winning 1.3 percent.

The consumer price index (CPI), a key gauge of inflation due for release on Thursday, will be closely-watched for its implications on Federal Reserve policy.

Over the past year, the Fed has raised interest rates aggressively to combat decades-high inflation in the United States, though it has since eased its pace of increases.

"The biggest driver here is the inflation expectations. The consensus forecasts are for a slowdown in the CPI," said LBBW's Karl Haeling.

With an overall trend of falling inflation, "that will ultimately ensure that the pace of rate hikes slows," he said.

Upward push

After wavering on Tuesday, markets resumed an upward push that has characterized the start of the year thanks to China's emergence from nearly three years of zero-Covid isolation.

The reopening, easing of Beijing's tech crackdown and moves to help the property sector have raised hopes for the world's number-two economy, a crucial driver of global growth.

"Many investors are starting to believe China's reopening could be faster than expected on pent-up demand, a robust economic rebound and fewer supply constraints," noted SPI Asset Management analyst Stephen Innes.

Among individual companies, Wells Fargo climbed 0.9 percent after announcing it was paring back elements of its mortgage business.

In Paris, shares in French luxury giant LVMH rose more than two percent after owner Bernard Arnault announced his daughter Delphine would head the empire's Dior fashion house, in a leadership reshuffle also featuring a new CEO at flagship brand Louis Vuitton.