Wall Street is pointed toward new heights before the opening bell Wednesday after new U.S. inflation data raised hopes that the Federal Reserve will cut its benchmark interest rate next month.
Futures for the S&P 500 and Nasdaq each ticked up 0.2 per cent, while futures for the Dow Jones Industrial Average rose 0.3 per cent. The S&P 500 and Nasdaq both closed at record highs on Tuesday.
TSX futures on Bay Street in Toronto are up nearly a quarter per cent ahead of the open, and just off an all-time high set earlier in August.
The rally in markets, which is partly being driven by relief over an extended truce in President Donald Trump’s trade war with China, is being powered by new optimism that borrowing costs in the U.S. will fall.
Lower rates would give a boost to investment prices and to the economy by making it cheaper for U.S. households and businesses to borrow to buy houses, cars or equipment. President Donald Trump has angrily been calling for cuts to help the economy, often insulting the Fed’s chair personally while doing so.
The Fed has hesitated, worried that Trump’s tariffs could trigger another round of elevated inflation.
The Fed will get one more report on inflation and another on the U.S. job market before its next meeting, which ends Sept. 17. The most recent jobs report was a stunner, coming in much weaker than economists expected.
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Critics say the broad U.S. stock market is looking expensive after its surge from a bottom in April. That’s putting pressure on companies to deliver continued growth in profit.
Gildan Activewear announced Wednesday that it was buying HanesBrands for $2.2 billion in a deal that will give HanesBrands shareholders close to 20 per cent of the combined company. The deal, which was widely reported Tuesday ahead of the official announcement, will give Gildan access to brands including Hanes and Maidenform.
HanesBrands shares fell more than nine per cent before the bell after climbing 28 per cent on Tuesday when rumors of the deal surfaced.
Cava slid 24 per cent in off-hours trading after the Mediterranean restaurant chain posted weaker-than-forecast same store sales in the second quarter and cut some of its full-year guidance. Company executives pinned some of the lag in same store sales on the “honeymoon effect,” when stores fail to sustain the huge demand they saw upon opening.
In Asia, Tokyo’s benchmark Nikkei 225 added to its record set a day earlier, finishing 1.3 per cent higher at 43,274.67.
“Asia woke up in full risk-on mode, riding the coattails of a U.S. session that looked like someone hit the ‘infinite bid’ button after CPI didn’t blow the inflation doors off,” Stephen Innes of SPI Asset Management said in a commentary.
Hong Kong’s Hang Seng surged 2.6 per cent to 25,613.67, while the Shanghai Composite index added 0.5 per cent to 3,683.46.
In Japan, relief over the Trump administration’s confirmation that its exports will face a flat 15 per cent U.S. import duty has driven strong buying of computer chip-related companies and other exporters.
Elsewhere in Asia, South Korea’s Kospi advanced 1.1 per cent to 3,224.37. In Australia, the S&P/ASX 200 shed 0.6 per cent to 8,827.10.
Taiwan’s Taiex was up 0.9 per cent and the Sensex in India gained 0.5 per cent. In Bangkok, the SET climbed one per cent after the Bank of Thailand cut its key interest rate by 0.25 percentage points to 1.5 per cent.
In Europe at midday, Germany’s DAX rose 0.9 per cent and the CAC 40 in Paris picked up 0.6 per cent. Britain’s FTSE 100 edged 0.1 per cent higher.
In energy trading, U.S. benchmark crude oil gave back 52 cents to $62.65 per barrel. Brent crude, the international standard, fell 44 cents to $65.68 per barrel.
The U.S. dollar dipped to 147.51 Japanese yen from 147.84 yen. The euro climbed to $1.1713 from $1.1677.
– With files from Global News’ Ari Rabinovitch
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