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Major stock exchanges around the world largely rose on Wednesday after lower-than-expected U.S. inflation for December reinforced expectations of interest rate cuts by the Federal Reserve, while safe-haven assets such as gold and silver also set fresh records.
The inflation figures reinforced the ongoing global rally across equities and commodities, even as concerns emerged over the Federal Reserve’s independence amid an investigation into Chair Jerome Powell and ongoing instability in Iran.
Gold climbed nearly 1% to a record $4,640.13 per ounce, while silver jumped over 5% to 91.5645, rising alongside benchmark indices in global equity markets.
Headline inflation in the U.S. held steady at 2.7% last month, with monthly price growth recorded at 0.3%. Core consumer prices, excluding food and energy, rose 0.2% from November, bringing the annual core inflation rate down to 2.6%, its lowest level in four years. Despite the improved inflation figure, markets still do not expect a rate cut at the January meeting. However, the data has strengthened the outlook for cuts in subsequent meetings.
Lower rates typically reduce borrowing costs and boost risk appetite, making equities and commodities more attractive to global investors, especially when the shift comes from the Federal Reserve, the world’s most influential central bank.
Despite the optimism over the Consumer Price Index (CPI), U.S. indices closed lower on Tuesday. The Dow Jones Industrial Average fell 0.8% to 49,191.99, the Nasdaq Composite edged down 0.1% to 23,709.87, and the S&P 500 declined 0.19% to 6,963.74.
Asian markets closed higher on Wednesday, with Japan’s Nikkei 225 gaining 1.5% to end at 54,341.23, while South Korea’s KOSPI advanced 0.65% to 4,723.10.
The Japanese yen weakened to 159.45 against the U.S. dollar, its lowest level since mid-2024, after reports emerged that Prime Minister Sanae Takaichi may call a snap election as early as February 8. In contrast, the Chinese yuan strengthened in onshore trading, closing the domestic session at 6.9734 per dollar, its firmest finish since May 16, 2023.
China’s Shanghai Composite slipped 0.3% to 4,126.09, while Hong Kong’s Hang Seng Index rose 0.6% to 26,999.81. However, the yuan strengthened, closing its domestic session at 6.9734 against the dollar, its strongest level since May 2023.
In Europe, the pan-European Stoxx 600 rose 0.3% to a record high, with gains across most sectors. France’s CAC 40 climbed 0.44% to 8,383.71, Italy’s FTSE MIB advanced 0.42% to 45,717.09, and the UK’s FTSE 100 added 0.23% to 10,161.04. Germany’s DAX, however, edged down 0.12% to 25,389.08.
Türkiye’s benchmark BIST 100 index also hit a new record, closing 0.4% higher at 12,440.55.
Other precious metals also advanced, with platinum up 2.7% to $2,400 per ounce and palladium rising 1% to $1,854.38.
Cryptocurrencies posted modest gains following a subdued period since the downturn in October. Bitcoin surged over 4% to surpass $95,000, while Ethereum rose by more than 6% to $3,328.50. XRP advanced 4% to $2.14.
Oil prices slipped following a brief overnight rally. The U.S. president’s announcement of steep tariffs on parties trading with Iran raised concerns over global supply chains, initially pushing crude higher. However, prices later settled lower, with Brent crude hovering around $65 per barrel and West Texas Intermediate (WTI) at $60.70.
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