Business

Stock markets get boost from bank earnings, inflation data

Agence France-Presse

January 16, 2025 | 6:30pm

Stock markets get boost from bank earnings, inflation data

Pedestrians walk past an electronic board displaying the numbers of the Tokyo Stock Exchange share price in Tokyo on June 17, 2024. Tokyo stocks opened lower on June 17 as a higher yen and falls in two of the three main US indexes weighed on the market.

AFP / Kazuhiro Nogi

WASHINGTON, United States — Stock markets surged on Wednesday, buoyed by robust US bank earnings and encouraging inflation data from the United States and Britain.

Wall Street's three main indexes closed sharply higher after US financial titans Goldman Sachs, JPMorgan Chase, BlackRock and others posted stellar quarterly results.

Fresh data published earlier Wednesday showed headline inflation in the Untied States accelerated in the 12 months to December, but actually slightly eased once volatile food and energy prices were stripped out, fueling optimism in the markets.

"There's a lot of relief from the (inflation) data this morning," Angelo Kourkafas from Edward Jones told AFP, noting there had been a positive market reaction to the decline in the so-called "core" inflation measure.

European stock markets closed firmly in the green, while Asia finished on a mixed note.

'Look through price increases'

Kathleen Brooks, research director at trading platform XTB, noted that the US Federal Reserve closely looks at core inflation to make decisions on interest rates.

"The Fed could choose to look through price increases for volatile commodities that they cannot control," she said. "Instead, the Fed may focus on core inflation," she said.

Analysts have pared back their expectations on the number of Fed rate cuts for this year.

They believe policymakers will hold borrowing costs steady at the next decision-making meeting later this month as inflation remains above its two-percent target.

In Britain, official figures showed that inflation unexpectedly cooled to 2.5 percent in December, easing some pressure on the Labour government as it struggles to grow the economy.

The pound rose against the dollar, with analysts forecasting that the Bank of England would likely cut its key interest rate next month as the rate of price increases cools.

Separate official data showed Europe's biggest economy Germany contracted for a second straight year in 2024, with little hope of a strong recovery ahead of national elections next month.

Nintendo jump

In Asia, Tokyo's stock market ended down, though games giant Nintendo piled on more than two percent and briefly hit a record high as traders anticipated it would soon release its much-anticipated Switch 2 console.

The Nikkei 225's drop also came as the yen strengthened, with traders weighing the chances of a rate hike by the Bank of Japan this month.

Oil prices soared more than 2.6 percent after the International Energy Agency said a colder winter has pushed global demand higher.

Oil traders were also digesting recent US sanctions on Russia and Iran, raising fears they could restrict supplies from those countries.

The market optimism also trickled through into the cryptocurrency markets, with bitcoin briefly returning above $100,000 before paring some gains.