MSCI’S global equities index pared earlier losses yesterday after economic data showed US inflation was high but in line with expectations and oil prices rose as Iran and the United States exchanged strikes.
The dollar and US Treasury yields were lower as US consumer inflation rose at its fastest pace since April 2023.
The Labour Department’s Bureau of Labour Statistics reported a 4.2 per cent increase in the Consumer Price Index in the 12 months through May. Traders maintained bets that the Federal Reserve would hold rates steady after its June 17 meeting and priced in a nearly 43pc probability of a 25-basis-point hike versus a 32pc chance rates would stay unchanged by December, according to CME Group’s FedWatch tool.
Steve Kolano, chief investment officer at Integrated Partners, said that the report “doesn’t do anything to reduce the probability of a possible rate hike at some point this year” with energy prices high and the Iran conflict still unresolved.
Oil prices rose again after US President Donald Trump wrote in a social media post that Iran would “pay the price” after taking too long to negotiate and Tehran said it would reassess its diplomatic engagement with Washington after overnight tit-for-tat strikes.
In energy markets, US crude rose 1.63pc to $89.64 a barrel and Brent rose to $92.65 per barrel, up 1.31pc on the day.
High oil prices are one of the prime drivers of inflation.
“Just because the inflation numbers came in consistent with expectations doesn’t mean they were good,” said Brian Jacobsen, chief economic strategist at Annex Wealth Management.
“The clock is ticking loudly to get the Strait of Hormuz open, either through force or through a truce. The Fed isn’t going to try to guess when that will happen, so President Trump needs to deliver them certainty before they meet.”
On Wall Street, the Dow Jones Industrial Average fell 187.91 points, or 0.37pc, to 50,684.20, the S&P 500 rose 2.58 points, or 0.03pc, to 7,389.23 and the Nasdaq Composite rose 5.46 points, or 0.04pc, to 25,689.59.
MSCI’s gauge of stocks across the globe fell 3.88 points, or 0.35pc, to 1,099.54.
The pan-European STOXX 600 index rose 0.2pc after clawing its way back from earlier losses.
Overnight, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 2.3pc. The tech-heavy South Korean KOSPI lost 4.5pc as AI stocks came under pressure. The CBOE volatility index .VIX, sometimes referred to as Wall Street’s fear gauge, rose slightly yesterday to 20.43 but stayed below its Tuesday intraday peak, which was its highest level since April 7.
Japan’s wholesale inflation accelerated in May at the fastest pace in three years as price pressures from the war broadened, data showed yesterday, adding to the case for further interest rate hikes by the Bank of Japan.
In government bonds, the yield on benchmark US 10-year notes fell 0.7 basis points to 4.521pc, from 4.528pc late on Tuesday while the 30-year bond yield fell 0.9 basis points to 5.0018pc.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 0.8 basis points to 4.116pc, from 4.124pc late on Tuesday. Among precious metals, gold trading was choppy after the inflation data. Spot gold fell 2.26pc to $4,166.09 an ounce. Spot silver fell 0.19pc to $65.23 an ounce but US silver futures fell 2.07pc to $63.75 an ounce.
Meanwhile, stock markets in the Gulf ended mixed yesterday after the US and Iran traded fresh strikes.
Saudi Arabia’s benchmark index fell 0.9pc, pressured by a 2.3pc fall in the country’s biggest lender by assets Saudi National Bank and a 0.4pc decrease in oil major Saudi Aramco.
Dubai’s main share index lost 0.5pc, with top lender Emirates NBD falling 1.3pc and blue-chip developer Emaar Properties losing 1.4pc. In Abu Dhabi, the index was up 0.2pc.
The Qatari index reversed early losses to close 0.1pc higher, helped by a 0.8pc rise in the Gulf’s biggest lender Qatar National Bank.
Outside the Gulf, Egypt’s blue-chip index retreated 2.1pc.
&uuid=(email))