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Global stocks edged higher while bond markets and currencies were largely steady yesterday as investors balanced renewed tensions in the Middle East against continued strength in technology shares and resilient economic data.
Oil prices seesawed as Iranian armed forces responded to a second night of US strikes with fresh attacks on US military infrastructure in neighbouring Qatar, Kuwait and Bahrain. Brent crude futures were down 0.62 per cent to nearly $77.54 after running higher to nearly $79 a barrel earlier in the day. US crude dropped 0.92pc to $72.84 a barrel.
Wall Street opened the day on an optimistic note after shedding some value Wednesday afternoon in reaction to the renewed military action in the Middle East. The Dow Jones Industrial Average edged up 0.16pc in early trading to 52,433.50; the S&P 500 rose 0.41pc to 7,513.49; and the Nasdaq Composite jumped 0.62pc to 26,030.46. MSCI’s gauge of stocks across the world rose 0.47pc.
In Treasury markets, benchmark 10-year US Treasury yields ticked lower to 4.56pc having started the month around 4.40pc.
HSBC’s Chief Multi-Asset Strategist Max Kettner said the bond markets remained highly sensitive to the Middle East tensions given the potential implications for inflation and global interest rates.
“In reality, the rates market is really following oil prices,” he said. “That has been clear over the last few days.”
Back in Europe the pan-European STOXX 600 index remained up 0.7pc with tech stocks up 2.6pc.
Global sentiment was also buoyed by a report that China could allow domestic AI firms limited access to AI leader Nvidia’s H200 chips and reports that SK Hynix’s $28 billion US share listing was more than seven times oversubscribed.
HSBC’s Kettner said the 30-day “realised volatility” on South Korea’s KOSPI index was 75pc currently. In comparison, a 7- to 10-year US Treasury exchange-traded fund traditionally has realised volatility of around 3pc.
The day’s early data showed the number of Americans filing claims for unemployment benefits fell last week, suggesting the labour market remained stable despite a slowdown in job growth in June.
Currency markets were rather muted, with the dollar barely moved, the yen stuck near a 40-year low and the euro, sterling and most other European currencies also little changed on the day. Wednesday’s June FOMC minutes, the first under new Federal Reserve Chair Kevin Warsh, had shown some growing concerns about inflation. Markets have increased the implied probability of a Fed hike this year to about 87pc, according to CME FedWatch.
Gold edged up 1.41pc to $4,133.62 an ounce as oil prices eased.
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