European stocks also held onto gains following the ECB’s rate decision

Stock markets rose on Thursday as US inflation data came in as anticipated, reinforcing the prospect of a Federal Reserve interest rate cut next week.

The European Central Bank (ECB) held rates steady for a second successive meeting, as expected, and raised its forecasts for eurozone growth and inflation this year.

Meanwhile, US Labor Department data showed the consumer price index (CPI) picked up to 2.9% in August, as economists monitor the impact of President Donald Trump’s tariffs on the country’s economy.

The figure was in line with analysts’ expectations and is seen as unlikely to deter the Fed (US central bank) from lowering interest rates next week.

While inflation is above the Fed’s 2% target, recent weak jobs figures have strengthened the likelihood of monetary policy easing, said Richard Flax, chief investment officer at European asset manager Moneyfarm.

Data released last week showed that the US economy added only 22,000 jobs in August, while revised figures showed job growth was significantly weaker than previously reported in the year through March.

Separate data released on Thursday showed initial claims for jobless benefits increased by 27,000 to 263,000 last week, the highest level since October 2021.

The real news of the day sits with the weekly jobless claims, said Art Hogan of B. Riley Wealth Management, who expects the US central bank to cut interest rates by 75 basis points by the end of the year.

That’s just more evidence that we’re seeing weakness in the labor market, Hogan said. So, clearly, the Fed’s full employment mandate is front and center.

US stock market’s three main indices closed at new records.

European stocks also held onto gains following the ECB’s rate decision.

The bank now expects the eurozone economy to grow by 1.2% this year, up from its previous forecast of a 0.9% expansion, with inflation to come in at 2.1%.

In Asia, the Tokyo stock market hit a record high, helped by a 10% surge in the share price of tech investment titan SoftBank.