### U.S. Index Futures Pointing to Lower Opening Amid Inflation Concerns
The major U.S. index futures are currently indicating a lower open on Wednesday, suggesting that stocks may pull back after gaining over the past two sessions.
Futures remained in the red following the release of the Labor Department's closely monitored report on consumer price inflation for August. While the report showed overall consumer prices aligning with economist expectations, core consumer prices increased slightly more than anticipated.
The Labor Department revealed that its Consumer Price Index (CPI) rose by 0.2% in August, consistent with the increase seen in July and aligning with economist estimates. However, core consumer prices, excluding food and energy, climbed by 0.3% in August, following a 0.2% rise in July. Economists had predicted a 0.2% increase in core prices.
While the Federal Reserve is still expected to lower interest rates next week, the larger-than-expected rise in core consumer prices might decrease the likelihood of a 50 basis points cut. According to CME Group's FedWatch Tool, there is currently an 85% chance of a quarter-point rate cut and a 15% chance of a half-point cut.
The report also indicated that the annual rate of consumer price growth slowed to 2.5% in August from 2.9% in July, slightly under economist expectations of a deceleration to 2.6%. The annual growth rate of core consumer prices held steady at 3.2%, matching economist forecasts.
On Tuesday, stocks fluctuated throughout the trading session but concluded the day mostly higher. The Nasdaq and the S&P 500 added to Monday's strong gains, although the Dow diverged from this trend. The Nasdaq rose by 141.28 points, or 0.8%, closing at 17,025.88, while the S&P 500 increased by 24.47 points, or 0.5%, ending at 5,495.52. Conversely, the Dow dipped by 92.63 points, or 0.2%, settling at 40,736.96.
Volatility during the trading day was attributed to trader anticipation ahead of forthcoming inflation data that could influence interest rate expectations before the Federal Reserve’s policy meeting next week. While the Fed is widely anticipated to lower interest rates, the extent of the cut remains a topic of debate.
Software stocks performed strongly, driving a 1.9% gain in the Dow Jones U.S. Software Index. Oracle (ORCL) notably surged by 11.4% after surpassing fiscal first-quarter expectations and announcing a strategic partnership with Amazon Web Services.
Additionally, networking stocks showed considerable strength, evidenced by a 1.9% increase in the NYSE Arca Networking Index. Gold, commercial real estate, and semiconductor stocks also performed well, while a significant drop in crude oil prices negatively impacted energy stocks. Banking stocks were also under pressure, with the KBW Bank Index falling by 1.8%.
### Commodity and Currency Markets
Crude oil futures are up by $1.45 to $67.20 a barrel after plummeting $2.96 to $65.75 a barrel on Tuesday. Meanwhile, gold is trading at $2,540.30 per ounce, down $2.80 from the previous session's close of $2,543.10. On Tuesday, gold rose by $10.40.
In the currency markets, the U.S. dollar is trading at 142.45 yen, unchanged from Tuesday's New York close. Against the euro, the dollar is at $1.1005, slightly down from $1.1020 on Tuesday.
### Asian Markets
Asian stocks declined on Wednesday as investors monitored updates on the Trump-Harris presidential debate and awaited U.S. consumer price inflation data, which could impact the Federal Reserve's policy decisions next week. Analysts predict the headline CPI to have increased by 0.2% month-on-month in August, similar to the previous month.
The dollar weakened while gold gained ground due to dovish expectations from the Fed. The current consensus suggests a 25-basis point cut, though it may not sufficiently stimulate the economy.
Oil prices rose by over 1% during Asian trading after reaching nearly three-year lows in the New York session amid concerns over a weak demand outlook.
Chinese markets hit a seven-month low following the U.S. House of Representatives' approval of The BIOSECURE Act, which restricts U.S. relations with certain Chinese biotech companies to protect national security.### Asian Markets
The benchmark Shanghai Composite Index declined by 0.8% to settle at 2,721.80. Meanwhile, Hong Kong's Hang Seng Index closed 0.7% lower at 17,108.71 after reaching a nearly one-month low earlier in the session.
In Japan, markets plummeted as the yen soared to an eight-month high following statements from Bank of Japan board member Junko Nakagawa, who indicated a willingness to raise rates if the economy and inflation align with forecasts. The Nikkei 225 Index dropped 1.5% to 35,619.77, while the broader Topix Index fell 1.8% to 2,530.67. Major automakers Honda Motor, Toyota, Nissan, and Mitsubishi Motors saw declines of 3-4%.
South Korean stocks finished lower for the seventh consecutive session due to foreign investor selling pressure. The Kospi fell 0.4% to 2,513.37, weighed down by financial and tech stocks. Samsung Electronics lost 2%, KB Financial Group plummeted 6%, and Shinhan Financial Group dropped 6.2%.
Australian markets ended slightly lower after Reserve Bank of Australia Assistant Governor Sarah Hunter commented on the tight labor market. The S&P/ASX 200 Index edged down 0.3% to 7,987.90, led by losses in banking and energy stocks. The broader All Ordinaries Index also closed 0.3% lower at 8,195.20.
In New Zealand, the S&P/NZX-50 Index saw a slight decline, ending marginally lower at 12,632.35.
### European Markets
European stocks are mostly higher as traders digest the latest U.S. consumer inflation data. Attention is also centered on the European Central Bank (ECB), which is expected to lower borrowing costs for the second time this year on Thursday.
The pan-European STOXX 600 Index rose by 0.5% to 510.30 after dipping by half a percent on Tuesday. Germany's DAX Index and France's CAC 40 Index both increased by 0.5% and 0.3%, respectively, while the U.K.'s FTSE 100 Index saw a 0.2% gain.
The British pound declined slightly following data showing that the U.K. economy unexpectedly stagnated in July. The official stats indicated no growth for a second consecutive month, with a fall in production and construction offset by a rise in services output. GDP had been forecasted to grow by 0.2%.
In the three months leading to July, GDP advanced by 0.5%, buoyed by robust service sector output.
Commerzbank shares surged after Italian lender UniCredit acquired a 9% stake and expressed plans to seek approval for potentially increasing their share. Conversely, Santander Bank Polska plunged after its parent company Banco Santander sold a 5.2% stake. Pest-control company Rentokil Initial also saw significant declines due to a profit warning.
### U.S. Economic Reports
The Labor Department's report released Wednesday showed that consumer prices in the U.S. increased in line with expectations for August, but the annual rate of growth slowed slightly more than anticipated. The consumer price index (CPI) rose by 0.2% in August, matching July's uplift and economists' predictions. The annual rate of consumer price growth slowed to 2.5% from July's 2.9%, slightly below forecasts of 2.6%.
This marks the smallest 12-month increase since February 2021. Core consumer prices, excluding food and energy, climbed by 0.3% in August after a 0.2% rise in July, in line with expectations. The annual rate of core consumer price growth remained unchanged at 3.2%.
At 10:30 a.m. ET, the Energy Information Administration is set to release its report on crude oil inventories for the week ending September 6. Crude oil inventories are expected to increase by 0.9 million barrels following a significant plunge of 6.9 million barrels the previous week.
The Treasury Department will announce the results of a $39 billion auction of ten-year notes at 1 p.m. ET.
### Stocks in Focus
Shares of Dave & Buster's (PLAY) are trading sharply higher in pre-market following better-than-expected fiscal second-quarter earnings. Home furnishings retailer Williams-Sonoma (WSM) is also likely to see early gains after Jefferies upgraded its rating from Hold to Buy.Shares of GameStop (GME) are experiencing significant pre-market declines following a sharp decrease in fiscal second-quarter sales reported by the video game retailer.
Additionally, Trump Media & Technology (DJT) could face scrutiny due to criticism surrounding former President Donald Trump's debate performance against Vice President Kamala Harris.
