Global stock markets rallied on Monday after key inflation data from the United States and Europe signaled a cooling trend, sparking optimism among investors that central banks may ease interest rates in the coming months.
The S&P 500 rose 1.3%, reaching a three-month high, while the NASDAQ Composite jumped 1.7%, buoyed by gains in tech stocks and investor anticipation of a more accommodative stance from the Federal Reserve. In Europe, the FTSE 100 and DAX also posted strong gains, increasing by 1.1% and 1.4% respectively.
Cooling Inflation Signals Policy Shift
April’s U.S. Consumer Price Index (CPI) data released last week showed inflation slowing to 3.2%, down from 3.5% in March. Similarly, the Eurozone reported a drop in inflation to 2.7%, its lowest level in over a year.
Analysts suggest this downward trend may provide central banks with the room to pause or even cut interest rates by the end of Q3. “Markets are pricing in at least one rate cut by September,” said Linda Roberts, Chief Economist at Global Equity Group. “That optimism is translating into renewed confidence, particularly in growth sectors.”
Tech and Green Energy Lead the Charge
The technology sector saw the largest gains, with Apple Inc., Microsoft, and Nvidia all closing over 2% higher. Green energy stocks also rallied following the U.S. Department of Energy’s announcement of a $15 billion investment in clean technology initiatives, part of its strategy to meet 2030 climate goals.
Investors are also watching Tesla, which is expected to unveil a new AI-powered vehicle platform at its upcoming shareholder meeting.
M&A Activity Heats Up
In corporate news, PepsiCo announced its acquisition of plant-based beverage brand Oatly for $5.4 billion, marking one of the largest consumer goods deals of the year. The acquisition is aimed at expanding PepsiCo’s sustainable product portfolio and increasing its market share in the growing health-conscious segment.
Meanwhile, reports suggest Microsoft is in preliminary talks to acquire cybersecurity firm CrowdStrike, although neither company has confirmed the deal.
Global Outlook Remains Mixed
Despite the optimism, some analysts warn of potential headwinds. Geopolitical tensions in the South China Sea and uncertainties surrounding China’s economic recovery could weigh on global trade in the coming months. Additionally, oil prices remain volatile, with Brent crude trading at $82 per barrel amid fluctuating supply expectations.
Looking Ahead:
Investors are closely monitoring upcoming earnings reports from major retailers like Walmart and Target, as well as May’s jobs report, which could offer further clues about the health of consumer spending and the broader economy.