Key facts
- Global stocks rose, with the MSCI world stocks index up 0.20%.
- Oil prices fell 2% to $87.30 per barrel.
- Softer U.S. inflation data increased expectations that the Federal Reserve will not raise interest rates in September.
- Strong earnings from AI infrastructure companies boosted technology stocks.
- The U.S. dollar index rose to its highest level in nearly two weeks, while the euro gained 0.12%.
Global stocks and the euro saw gains on Thursday, driven by softer U.S. economic data that bolstered expectations of the Federal Reserve maintaining current interest rates. The tech sector, particularly AI infrastructure firms, experienced a significant boost from strong earnings reports.
The MSCI world stocks index climbed 0.20%, with European shares on the STOXX 600 index rising 0.26%. Asian equities outside Japan saw a notable increase of 1.08%, led by a 3.78% surge in South Korean stocks and a 1.67% rise in Japan's Nikkei, fueled by chip-related stocks and positive earnings outlooks.
Oil prices declined by 2% to $87.30 per barrel. This drop was attributed to signals of lower demand, including a substantial weekly increase in U.S. commercial crude oil inventories and a revised lower world oil demand growth forecast for 2026 by OPEC. Attention also shifted back to geopolitical tensions involving Iran, though the impact on oil prices was tempered by demand concerns.
Traders adjusted their outlook on Federal Reserve policy, with the probability of a September rate hike decreasing to 65% from 50% prior to the release of the latest economic and inflation figures. This shift supports riskier assets, according to Jefferies economist Mohit Kumar.
The U.S. dollar index saw a slight increase, reaching its highest level in nearly two weeks, influenced by concerns over the stalemate in Iran. Conversely, the euro benefited from lower oil prices, rising 0.12% against the dollar. U.S. Treasury yields experienced a modest decline, with strategists cautioning about potential upward pressure on long-term borrowing costs due to supply and fiscal concerns.
Japan's producer price index, which rose 7.2% year-on-year in July, reinforced expectations that the Bank of Japan might consider an interest rate hike sooner than previously anticipated.