US inflation slowed more than expected in the latest reading, bolstering market expectations that the Federal Reserve will deliver further interest-rate cuts in the months ahead. Core consumer prices rose 2.6%, undershooting economists’ forecasts for a 3% increase, a surprise that helped spark a rally across risk assets.
In Europe, the tone from policymakers was more cautious. European Central Bank officials signaled that the rate-cutting cycle is likely over, pushing back against investor expectations for additional easing after recent policy moves.
Geopolitics and fiscal policy were also in focus following an EU summit that ruled out using frozen Russian assets held at Euroclear to finance Ukraine. Instead, leaders agreed to fund support through the EU budget, backed by joint bond issuance to provide a €90 billion loan package for Kyiv. The decision may increase Europe’s leverage in future negotiations, while easing legal concerns around asset seizures.
In the corporate arena, ByteDance Ltd., the owner of TikTok, finalized an agreement to create a US joint venture, with Oracle Corp. and Silver Lake Capital set to take stakes in the business, a move aimed at addressing long-standing national security concerns.
Markets showed limited follow-through after the inflation-driven rally. European stocks traded little changed, while equities in China and Japan climbed about 1%. US equity futures were marginally higher, as investors turned their attention to the University of Michigan consumer sentiment index due later in the session.