Today Fundamental Analysis: US indices rise after CPI numbers showed cooler inflation

US stock futures were largely flat early Thursday as investors are looking ahead to the July PPI report. Dow Jones and S&P 500 futures were little changed, while Nasdaq-100 futures edged up 0.1%

The main focus is the US Producer Price Index (PPI), due Thursday, with economists expecting a 0.2% monthly increase. The data comes after July CPI rose just 0.1% month-on-month, in line with expectations. The softer inflation reading supported the S&P 500 and reduced expectations for a September Fed rate hike, although markets still see a strong possibility of a hike later in October or December.

In Europe, The UK economy grew 0.4% in Q2, slowing from 0.6% in Q1 but matching expectations.Asian semiconductor stocks rallied sharply on Thursday as reduced expectations for US interest-rate hikes and renewed optimism over AI spending improved sentiment toward the technology sector.South Korean chipmakers led the gains, with SK Hynix rising more than 7% and Samsung Electronics gaining around 5.8%, extending their recovery after the recent tech-sector selloff.

Gold is pulling back from around $4,450, its highest level since June 5, and has fallen below $4,400. Although the latest US inflation data initially supported gold by reducing expectations of a September Fed rate hike, concerns that higher oil prices could reignite inflation are now weighing on the precious metal.

US July CPI slowed to 3.4% on a yearly basis from 3.5%, in line with expectations. Combined with the weaker-than-expected July NFP report, the data gives the Fed more room to keep rates unchanged in September, which initially benefited gold.

However, ongoing US-Iran tensions and disruptions around the Strait of Hormuz and Red Sea are keeping oil prices and inflation risks elevated.

Investors will now watch July retail sales on Friday, expected to rise only 0.1%, for further clues about the strength of the US economy.

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