London (AFP) – Financial markets largely steadied Wednesday as traders awaited the publication of US inflation data that is set to help guide the Federal Reserve on its plans for interest rates. The dollar was little changed against its main rivals, while oil prices dipped as they tracked developments in the Middle East. European and Asian stock markets were not experiencing the volatility that has gripped company values for weeks, as investors weigh corporate earnings against concerns about huge spending by technology firms seeking greater AI presence.
“European stock markets were…barely changed along with US futures ahead of key US inflation data, while the ongoing concerns about the Middle East keep the oil price and its impact on inflation expectations and yields top of mind for traders,” noted Neil Wilson, investor strategist at Saxo UK. Traders trod nervously ahead of Wednesday’s US consumer price index (CPI) figures, which follow a report last week showing the world’s top economy lost more than 20,000 jobs in July. The median forecast is 3.4 percent, and “about 30 percent of economists are expecting a lower inflation print than 3.4 percent, when only 12 percent of them are seeing inflation being published higher,” according to Florian Ielpo, an analyst at Lombard Odier. The figures are due at 8:30 am New York time (1230 GMT), an hour before Wall Street opens for trading.
With US inflation holding stubbornly above the Fed’s two-percent target for more than five years — compounded by the Middle East war since February — monetary policymakers are considering a lift in borrowing costs. The central bank’s July meeting saw three board members call for an increase, dissenting from the final decision to hold rates steady, and investors are betting they will announce one before the end of the year, with some eyeing at least two. “Markets are still expecting a hike from the Fed by year-end, but that hike keeps being pushed to later these days: the odds of a September hike are at about 50 percent at the moment,” said Ielpo. There will be one more CPI release and another jobs report before the Fed’s next meeting in September.
Oil prices stabilized Wednesday after big swings in recent weeks as US-Iran war tensions ebbed and flowed. Pakistan’s interior minister was visiting Iran to discuss regional security, stability, and other developments, as Islamabad tries to mediate a resolution to the conflict. It comes as the International Energy Agency sharply reduced its forecast for global oil demand this year, as supplies remain crimped by the closure of the Strait of Hormuz and high prices deter buyers. Demand is expected to slump by 1.6 million barrels per day compared with its forecast slump of one million in its July report.
Key figures around 1045 GMT:
– London – FTSE 100: UP 0.1 percent at 10,853.98 points
– Paris – CAC 40: DOWN 0.1 percent at 8,709.24
– Frankfurt – DAX: UP 0.5 percent at 26,533.58
– Tokyo – Nikkei 225: UP 0.8 percent at 67,524.06 (close)
– Hong Kong – Hang Seng Index: DOWN 0.8 percent at 25,440.17 (close)
– Shanghai – Composite: UP 0.3 percent at 3,946.68 (close)
– New York – DOW: DOWN 0.3 percent at 53,791.85 (close)
– Brent North Sea Crude: DOWN 0.2 percent at $88.76 per barrel
– West Texas Intermediate: DOWN 0.1 percent at $83.08 per barrel
– Euro/dollar: DOWN at $1.1540 from $1.1542 on Tuesday
– Pound/dollar: UP at $1.3522 from $1.3506
– Dollar/yen: DOWN at 159.12 yen from 159.27 yen
– Euro/pound: DOWN at 85.33 pence from 85.46 pence
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© 2024 AFP
