A GAUGE of stock markets around the world edged up yesterday as the US central bank head said inflation expectations have fallen, while crude oil prices were down as optimism over US-Iran talks eased supply concerns.
Traders also watched for possible Japanese intervention in the currency market after the yen touched fresh 40-year lows against the dollar.
Speaking on a panel of central bankers in Sintra, Portugal, Federal Reserve chair Kevin Warsh said inflation expectations and inflation risks have come down in recent weeks. He said his fellow US policymakers will decide whether to raise interest rates when they begin their next meeting, keeping to his word on not giving forward guidance.
His comments weighed on the dollar, which has been underpinned by rising expectations of Fed rate hikes this year, as inflation runs well above the central bank’s 2 per cent annual target. Still, many analysts believe the inflation picture will improve in the months ahead.
“Nothing that we see suggests that any imbalance either on the activity side or the inflation side is growing rapidly,” said Steve Englander, head of global G10 FX research and North America macro strategy at Standard Chartered Bank’s New York branch.
“You can afford to wait and see how these longer-term technological trends play out,” Englander added. “What we do see is that unit labour costs are very, very soft, and ultimately that’s what the Fed controls.”
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.13pc to 101.36, with the euro down 0.35pc at $1.1381. Against the Japanese yen, the dollar last weakened 0.07pc to 162.43. Futures imply no move from the Fed in its meeting late this month, while a hike in September is priced in.
In late morning trading yesterday in New York, the Dow Jones Industrial Average rose 239.04 points, or 0.46pc, to 52,558.24, the S&P 500 rose 15.04 points, or 0.20pc, to 7,514.40 and the Nasdaq Composite fell 34.22 points, or 0.13pc, to 26,179.50.
MSCI’s gauge of stocks across the globe rose 0.61 point, or 0.05pc, to 1,121.07, and the pan-European STOXX 600 index fell 0.31pc, while Europe’s broad FTSEurofirst 300 index fell 10.51 points, or 0.41pc. Emerging market stocks rose 0.82 point, or 0.05pc, to 1,723.71.
In Asia, Japan’s Nikkei gained 0.6pc after surging 37pc last quarter, with strong tech demand lifting sentiment among big manufacturers to an eight-year high. South Korea’s main index fell about 2pc, following a 68pc rally last quarter driven by AI-fuelled chip demand.
In energy markets, oil prices fell as optimism over US-Iran talks eased supply concerns.
“The negotiations that are currently taking place in Qatar are perceived as being positive (and) that has allowed prices to drift further,” Saxo Bank analyst Ole Hansen said.
“There is a chance that we could see even lower prices.”
US crude fell 1.74pc to $68.29 a barrel and Brent fell to $71.35 per barrel, down 2.19pc on the day. Despite sharp price declines last quarter, both are up nearly 20pc year-to-date.
Spot gold jumped nearly 2pc after posting on Tuesday its largest quarterly drop since 2013.
Meanwhile, Gulf stock markets mostly closed in positive territory yesterday as negotiations between Iran and the US to end the war continued.
Saudi Arabia’s benchmark index gained 0.5pc, with the country’s biggest lender Saudi National Bank rising 0.8pc. Elsewhere, oil major Saudi Aramco finished flat.
Dubai’s main share index rose 0.9pc, with top lender Emirates NBD gaining 1.6pc. In Abu Dhabi, the index eased 0.2pc.
The UAE raised crude oil and condensate exports to a record in June, preliminary ship-tracking data from Kpler and Vortexa showed, weeks after the Gulf producer quit Opec. The surprise decision to end nearly 60 years of membership in the Organisation of the Petroleum Exporting Countries on May 1, during the US-Israeli war with Iran, was aimed at unlocking greater value from its resources by freeing output from the group’s quota system.
The Qatari index concluded 0.5pc higher.
Outside the Gulf, Egypt’s blue-chip index inched 0.1pc higher.
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