US shares advanced on Thursday, with the S&P 500 reaching a record closing high as softer producer inflation strengthened expectations that the Federal Reserve can keep interest rates on hold.
The S&P 500 rose 0.7% to a record 7,798.99 after touching an intraday high of 7,816.70. Communication services, real estate and information technology led the advance, while materials was the weakest sector. The benchmark is now up around 14% this year.
Nvidia extended its recent recovery, gaining 0.5% and lifting its market capitalisation to US$5.45 trillion. Workday was among the strongest Nasdaq 100 performers, surging 17% following a Reuters report that private equity firm Silver Lake is in talks to acquire the software company. SanDisk and Intuit also advanced.
Cisco Systems was a notable laggard, falling more than 8% after its latest quarterly results failed to impress investors. Cerebras dropped almost 12% following its earnings update, while Coherent declined around 8%.
The gains came as investors assessed a second encouraging US inflation reading in as many days, reinforcing expectations that the Federal Reserve may have more room to leave rates unchanged. US producer prices were unchanged in July, below expectations for a 0.2% monthly increase. Core PPI, excluding food and energy, rose 0.2%, also below the 0.3% increase forecast. The data followed Wednesday’s consumer inflation report, which showed CPI rising 0.1% in July. Markets have subsequently reduced expectations for another near-term rate increase, with the probability of the Fed holding rates steady in September rising to around 66%, from 45% a week ago.
Oil prices fell as traders weighed weaker demand against continuing uncertainty surrounding the Iran war. Brent crude declined more than 2% to US$87.07 a barrel, while West Texas Intermediate fell more than 2% to US$81.25.
Australian Market Outlook
Australian shares are set to open lower despite the record close on Wall Street, with S&P/ASX 200 futures down 37 points, or 0.4%, to 9,091. The softer US inflation readings provide a more supportive backdrop for global interest rates, although investors remain focused on the local August reporting season and company-specific results. Offshore, attention remains on the Federal Reserve’s September meeting, with expectations increasingly shifting towards rates remaining unchanged following the latest CPI and producer price data.
