Global Markets Rebound Amid Softer Inflation Data

European shares rose on hopes of softer U.S. inflation data. New Zealand's central bank cut rates, impacting the Kiwi dollar. Despite Japan's political uncertainty, Asian shares increased. U.S. markets jumped on cooling inflation signals, and traders are hopeful for Federal Reserve rate cuts. European bonds and oil prices also reacted.

European shares saw an uptick on Wednesday, driven by data indicating softer inflation, helping markets recover from last week's downturn. Traders are optimistic about U.S. inflation data, expecting it to show benign results later in the session. New Zealand's central bank cut interest rates for the first time in four years, signaling further monetary easing. This move led to a 1% dip in the Kiwi dollar.

Despite Japan's Prime Minister Fumio Kishida announcing his resignation, which wobbled the yen and Nikkei, Asian shares rose overall as markets bounced back from recent losses. At 0856 GMT, the MSCI World Equity index was up 0.3%, reaching its peak in 12 days. Europe's STOXX 600 increased by 0.4%, while London's FTSE 100 climbed 0.5% after lower-than-expected British inflation in July. UBS shares surged 2.9% following a reported $1.1 billion net profit for April to June.

Last week's global market sell-off was largely attributed to fears of a U.S. recession, prompting bets that the Federal Reserve would cut rates to stimulate growth. Stocks and bonds were impacted by traders exiting yen carry trades, a response to the yen strengthening post a surprise Bank of Japan rate hike. However, subsequent U.S. data has alleviated recession concerns. Stocks surged on Tuesday after U.S. producer price data suggested inflation is cooling, bolstering speculation of upcoming Fed rate cuts. Traders are closely watching U.S. CPI data due at 1230 GMT, hoping it will reinforce the rate-cut narrative. Atlanta Federal Reserve President Raphael Bostic expressed a need for more data before supporting rate cuts. European bond yields showed minimal changes, while oil prices rose due to reduced U.S. crude and gasoline inventories and concerns over the Israel-Gaza conflict. Gold prices also saw a 0.4% increase.

(With inputs from agencies.)