There were several market-moving events between the close of US stock markets on Wednesday and the opening on Thursday. As a result, the Dow Jones Industrial Average and the S & P 500 reached a record high on Thursday.
Investors must know this.
Stock futures rose on Wednesday night after President Donald Trump announced that he would delay the planned tariff increase on Chinese goods by 15 days as a "gesture of goodwill." Tariffs are expected to rise from 25% to 30% for goods worth around $ 250 billion. Finance Minister Steven Mnuchin told CNBC on Thursday morning that the president could "make a deal with China anytime", but will not do so until "it's a good deal."
"The President has postponed it due to a request from the vice premier," added Mnuchin. He said Chinese Vice Premier Liu Er had requested this because the 70th anniversary of the founding of the People's Republic of China had been committed on October 1
ECB cuts interest rates
On Thursday morning, the European Central Bank (ECB) announced a cut in deposit rates by 10 basis points to minus 0.5%. The ECB also announced a major € 20 billion bond purchase program per month as part of its Quantitative Easing (QE) initiative. The euro fell to its lowest level against the dollar in almost two weeks, but later recovered to around $ 1.104, as foreign exchange investors remain uncertain whether the ECB's policy will successfully increase inflation. In addition, bond yields declined in the eurozone, with German 10-year bond yields falling to minus 0.64%.
Investors were pleased that the ECB was again attempting quantitative easing in the hope that the new program would boost the global economy.
About an hour before the US stock market opened on Thursday, the Department of Labor reported consumer prices slowing last month. The consumer price index, which serves as a measure of inflation, rose only slightly in August. Core CPI, however, rose to 2.4% yoy, its highest level since 2008.
Tame inflation should keep the Federal Reserve on track to cut interest rates next week.
Stock indices near all-time highs
Both the Dow and the S & P 500 entered trading less than 1% below the July all-time highs on Thursday. After Thursday's gains, the Dow and the S & P 500 were down 0.5% after breaking new records. The Dow is aiming to surpass an intraday record high of 27,398.68, while the S & P 500 is nearing its previous record of 3,027.98 points, indicating that the Trump government is considering an inter-trade agreement with China. But equities quickly made gains after a senior White House official refused the report. The official told CNBC that Trump's government "is not thinking" about a limited trade agreement to move or cancel tariffs on China.
Equities recovered, however, with stocks such as Apple and Amazon leading the gains.