Key facts
- Global stocks and government bonds rose on Wednesday.
- US CPI data is expected to show an acceleration in inflation.
- Money markets indicate a roughly 20% chance of a Fed hike this month.
- Brent crude futures were up over 0.5% at $106.4 a barrel.
- The yield on 10-year Treasury notes dipped 1 basis point to 5.21%.
Global stocks and government bonds saw modest gains on Wednesday as investors awaited US inflation data, with AI-related shares showing some recovery. Oil prices rose due to geopolitical tensions in the Strait of Hormuz, while markets braced for US consumer price index figures that could influence Federal Reserve rate hike expectations.
Tech shares in Europe were among the top performing sectors, mirroring a recovery in Asia where Samsung Electronics and SK Hynix closed higher, supported by an upbeat outlook from Dutch chip equipment maker ASML, whose shares rose 1.4%. Europe's STOXX 600 was up 0.5%, while the MSCI All-World index edged up 0.1%.
Sentiment remained cautious as oil prices climbed following attacks on two vessels in the Strait of Hormuz and after Iranian officials told Reuters they were deploying new tactics to target ships, raising the risk of fresh disruption to energy supplies. Brent crude futures were last up over 0.5% on the day at $106.4 a barrel.
Government bonds also witnessed some respite after a few weeks of almost non-stop selloffs, in the face of high energy prices and rising expectations for global interest rates to keep edging up. The yield on benchmark 10-year Treasury notes dipped 1 basis point to 5.21%, nearing its lowest in two weeks, while 30-year yields were steady at 5.56%, following three days of declines.
Investors were awaiting the release of the US consumer price index for September, which is expected to have picked up, given the strength of energy and other commodity costs last month. Economists estimated headline inflation accelerated to an annual 3.6% in September due to rebounding energy prices, with the core CPI rising 0.2% on a monthly basis. Money markets show traders are attaching a roughly 20% chance of a hike from the Federal Reserve late this month and a near-100% chance of a rise in December. Wednesday's inflation data could help refine those odds.