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Global stocks hold gains after in-line US CPI

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LONDON, Aug 12 : Global stocks held on to gains on Wednesday after U.S. inflation data came in as expected, while oil prices edged higher after a senior Iranian official told Reuters there were no discussions with Washington on extending a ceasefire.

The Consumer Price Index edged up 0.1 per cent last month after dropping 0.4 per cent in June, in line with a Reuters poll of economists and analysts. Annual CPI inflation slowed to 3.4 per cent from 3.5 per cent a month earlier.

“Inflation is heading in the right direction for now, and given Federal Reserve Chair Kevin Warsh’s desire not to give much, if any, forward guidance, there should be a fairly sanguine market reaction to these latest figures,” said Richard Carter, head of fixed interest research at Quilter Cheviot.

Traders stuck to their bets that narrowly favour an interest rate hold at next month’s meeting following the data, with markets giving about a 55 per cent chance that the Fed will keep its policy rate in the current 3.50 per cent-3.75 per cent range. 

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U.S. stock futures, the S&P 500 e-minis, were up 0.4 per cent, holding onto gains after the data. Nasdaq futures rose 0.8 per cent, as upbeat results from AI cloud company CoreWeave after Tuesday’s close gave the AI trade another boost.  

In Europe, the pan-continental STOXX 600 was up about 0.2 per cent. Major stock indexes in Frankfurt, Paris and London were up 0.1 per cent to 0.4 per cent. 

In Asia, stocks rose 0.9 per cent, led by a 3.7 per cent gain in South Korea’s Kospi and an almost 1 per cent rise in Japanese and Taiwanese stocks as chipmakers rose sharply. 

TALKS TO END IRAN WAR CONTINUE

Markets were still following negotiations to end the Iran war and reopen the Strait of Hormuz to shipping traffic. 

A senior Iranian source told Reuters there were no discussions between Iran and the U.S. to extend their ceasefire because, from Tehran’s perspective, the deal had no start date and therefore there was nothing to extend. 

The update followed attacks on shipping in the Middle East on Tuesday, while both Iran and the U.S. have stepped up their rhetoric in recent days.

Despite the lack of progress, investors are calm, with stocks across the globe close to record highs.  

“Our base case for a long time has been a gradual but messy de-escalation,” said Dorian Carrell, head of multi-asset income at Schroders.

“We don’t expect traffic (through the Strait of Hormuz) to go to its full capacity. We think that puts a floor on the oil price and maintains an energy-driven inflationary driver in markets in the near- to medium-term.”

U.S. crude rose 0.7 per cent to $83.71 a barrel and Brent rose 0.3 per cent to $89.19 per barrel, with both poised to extend five-day positive streaks. Both benchmarks settled more than $1 higher on Tuesday, marking their highest closes since July 31 and extending gains after jumping about 5 per cent on Monday.

In currencies, the dollar index dipped to 99.69. The euro and sterling both ticked up after the U.S. inflation data. 

The yen strengthened 0.3 per cent to 158.81 per dollar, but remained off last week’s high of 155.20 after several suspected rounds of intervention.

Spot gold rose 1.4 per cent to $4,428 an ounce, while spot silver jumped 2.9 per cent to $66.47 an ounce. 

Source: Reuters

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