S&P 500 and Nasdaq reach record highs. Natural gas prices fall to a one-year low

The Dow Jones (US30) Index rose by 1.10% on Tuesday. The S&P 500 (US500) gained 1.13%. The tech-heavy Nasdaq (US100) closed up by 1.33%. Major Wall Street indices rallied on Tuesday, with the S&P 500 and Nasdaq hitting record highs, after July inflation data largely met expectations. The Consumer Price Index (CPI) rose by 0.2% month-over-month and 2.7% year-over-year, easing fears of rising prices amid ongoing trade tensions. This bolstered expectations for a Federal Reserve rate cut next month. Traders are pricing in an approximately 90% probability of a 25-basis-point rate cut in September. Investor sentiment was further boosted by the largest inflow into US stocks in two years and optimism ahead of the Jackson Hole Fed meeting later this month.

European stock markets traded with mixed performance yesterday. The German DAX (DE40) fell by 0.23%, the French CAC 40 (FR40) closed up by 0.71%, the Spanish IBEX35 (ES35) gained 0.02%, and the British FTSE 100 (UK100) closed up by 0.20%. The ZEW Economic Sentiment indicator for Germany declined for the first time in four months to 34.7 in August 2025, down from 52.7 in July, which was its highest reading since 2022, and below expectations of 40. The significant drop in the August 2025 ZEW indicator was partly due to the poor performance of the German economy in the second quarter of 2025.

WTI oil prices fell to $63.5 a barrel on Tuesday, close to the two-month low of $62.77 reached the previous week, as President Trump extended the US-China tariff truce for 90 days and investors awaited US-Russia talks on Ukraine. Trump downplayed hopes of a breakthrough, calling the meeting a chance to “test the waters” for peace, while Ukrainian President Zelenskyy rejected any talks of ceding territory. Separately, OPEC projected a tighter oil market for 2026, citing higher demand and slowing non-OPEC production growth. Attention will turn to the monthly reports from the US Department of Energy and the IEA for market insights.

The US natural gas prices (XNG/USD) fell below $2.9 per million British thermal units (mmBtu), their lowest since November 2024, pressured by near-record output, high storage levels, and expectations for milder weather. August production in the lower 48 states averaged 108.3 billion cubic feet per day (Bcf/d), up from the record July output of 107.9 Bcf/d. Despite a hotter-than-usual summer, the high supply has allowed for above-average injections into storage, and stockpiles are about 6% above the seasonal norm and are expected to continue rising.

Asian markets were mostly higher yesterday. Japan’s Nikkei 225 (JP225) rose by 2.15%, China’s FTSE China A50 (CHA50) gained 0.88%, Hong Kong’s Hang Seng (HK50) was up 0.25%, and Australia’s ASX 200 (AU200) posted a positive result of 0.41%.

The Australian dollar weakened to $0.652 against the US dollar on Wednesday, giving up the previous session’s gains after a dovish rate cut by the Reserve Bank of Australia continued to weigh on the currency. On Tuesday, the central bank cut its official cash rate as expected and signaled that further easing may be needed to meet its inflation and employment goals amid a loss of economic momentum. It also lowered its 2025 GDP expectations to 1.7% from 2.1%, citing weak household demand at the start of the year that is unlikely to recover. Markets are now implying a slim 34% chance of another rate cut in September.