US CPI Data Looms Over Record High DAX Index

The German DAX Index has soared 21.07% year-on-year but paused after recent peaks, with Rheinmetall down 7% in two sessions and Siemens Energy losing 4% on Tuesday. Traders await US CPI data, with markets pricing in a 21 basis point rate cut next week, though a higher-than-expected inflation reading could temper such expectations. Meanwhile, the Canadian dollar hovers near a 4.5-year low amid rising unemployment and anticipated rate cuts.

Equities

The FTSE 100 dropped 0.9% on Tuesday, marking its steepest fall in nearly a month. Mining stocks led the decline, with Glencore, Antofagasta, and Anglo American losing between 1.1% and 3.5% as copper prices fell due to concerns over weaker export growth in China and a stronger dollar.

Equipment rental firm Ashtead saw its shares plunge 14% after it warned of lower-than-expected annual profits, citing a soft commercial construction market in the US. The company also announced plans to shift its primary listing from London to New York, reflecting a broader trend of firms favouring higher valuations in US markets. FirstGroup shares rose 6.5% after it announced the acquisition of RATP London, boosting optimism around its growth strategy.

Across the Atlantic, Wall Street indices closed lower ahead of the much-anticipated US inflation data release. The Dow Jones Industrial Average fell 0.35%, the S&P 500 slipped 0.3%, and the Nasdaq declined 0.25%. Technology stocks bore the brunt of the losses, with Oracle sliding 6.7% following a second-quarter earnings miss. The semiconductor index dropped 2.5%, driven by concerns over China’s investigation into Nvidia for potential anti-monopoly law violations, seen as a reaction to US restrictions on China’s chip industry.

Alphabet’s shares rose 5.6%, buoyed by the unveiling of a new chip, making it one of the strongest performers in the communication services sector, which gained 2.6%. Walgreens Boots Alliance surged 17.7% after reports of takeover talks with private equity firm Sycamore Partners. Alaska Airlines saw its stock jump 13% after it raised its fourth-quarter profit forecast, while Boeing gained 5.5% as production resumed on its 737 MAX jets.

Moderna fell 9.1% after Bank of America issued an ‘underperform’ rating. In mid-caps, MongoDB dropped 16.9% despite improving its annual forecast, and Toll Brothers lost 6.9% following mixed quarterly results.

Forex & Commodities

The yen strengthened against the US dollar, rising 0.19% to 151.685 after Japanese wholesale inflation data exceeded forecasts, suggesting a potential Bank of Japan rate hike next week. The US dollar remained firm against other major currencies, with the dollar index rising to 106.38.

The Australian dollar fell to $0.6373, near a four-month low, after the Reserve Bank of Australia’s dovish policy outlook weighed on sentiment, and the New Zealand dollar hit its weakest level in over a year at $0.5794.

Gold prices held near a two-week high at $2,691.57 per ounce, bolstered by expectations of a Federal Reserve rate cut next week and geopolitical tensions in Syria. Futures for gold rose 0.5% to $2,730.50, while silver edged down 0.5% to $31.75 per ounce. The focus is on US CPI data, with economists predicting a 0.3% rise in November, which could influence the pace of Fed policy easing.

Oil prices edged higher, with Brent crude futures up 0.5% to $72.55 per barrel and US West Texas Intermediate crude also rising 0.5% to $68.95. The gains followed Beijing’s announcement of a looser monetary policy for 2025, boosting expectations for increased crude demand in China, the world’s largest oil importer. However, the US Energy Information Administration’s report later today may shift sentiment, with analysts forecasting mixed stockpile changes.