Wall Street hits record highs on Fed cut bets

US equities closed at record highs on Thursday as traders grew more confident that persistent inflation won’t stop the Federal Reserve from cutting rates next week. The S&P 500 jumped 0.90%, topping the 6 588 mark for the first time, while the Dow Jones rallied 616 points to finish above 46 107. The Nasdaq 100 climbed 0.60%. August CPI data showed monthly consumer prices rose 0.40%, slightly above forecasts, though the annual rate held steady at 2.90%. Meanwhile, jobless claims rose by 27 000 to 263 000, the highest since 2021, reinforcing signs of labour market weakness. Traders are now fully pricing in a quarter-point cut on September 17, with growing odds of a larger 50 bps move.

In Europe, stocks advanced after the ECB kept interest rates unchanged for a second meeting. The STOXX 50 rose 0.40% and the STOXX 600 added 0.50%. Policymakers slightly raised inflation forecasts for 2025 and 2026 but stressed the outlook remained broadly stable. ECB President Christine Lagarde’s comments led traders to trim bets on additional rate cuts, suggesting the easing cycle may be over.

On the JSE, the all-share added 0.33% despite weak manufacturing data. Output fell 0.70% y/y in July, ending a two-month streak of growth, driven largely by declines in metals, machinery, wood, paper, and printing.

In Asia, the Hang Seng fell 0.40% to 26 086, pulling back from a four-year high as sentiment soured following reports the US may impose restrictions on Chinese medicines and licensing deals for experimental drugs. Japan’s Nikkei, however, rose 1.22% to a record 44 372, lifted by renewed Fed rate-cut hopes after US producer prices unexpectedly dropped in August.

Oil prices declined, with WTI crude slipping over 2% to $62.40 per barrel, breaking a three-day rally. The pullback came as US crude inventories rose by 3.9 million barrels last week and the IEA flagged stronger-than-expected supply growth, partly driven by OPEC+ production increases.