Global markets: Global markets traded mixed on Thursday as softer-than-expected US inflation data supported risk appetite, while geopolitical tensions and sharp losses in Asian technology stocks limited gains.
According to Anadolu Agency, US consumer and producer inflation both came in below expectations, reinforcing expectations that the Federal Reserve could delay a potential interest rate hike. Investor sentiment remained cautious, however, after US Central Command announced a second wave of strikes targeting Iranian military capabilities, which it said were used to threaten shipping through the Strait of Hormuz. Iran's Islamic Revolutionary Guard Corps stated that its retaliatory operations were aimed at destroying US infrastructure in the region.
Fed Chair Kevin Warsh commented on the investments in artificial intelligence, suggesting they could create short-term price pressures but may not prove inflationary over the longer term. He welcomed the latest inflation data but emphasized that current indicators remain imperfect measures of underlying price pressures. New York Fed President John Williams noted that inflation appeared to have peaked and should gradually ease, while Fed Governor Lisa Cook expressed readiness to act if disinflation stalled. The Fed's Beige Book revealed that economic activity expanded at a mild to moderate pace across most US regions.
The International Monetary Fund reported that weaker demand, higher production, and inventory drawdowns had prevented a sharper rise in oil prices following the Middle East conflict, though it warned that most of those buffers had now been exhausted. The benchmark US 10-year Treasury yield remained largely unchanged at 4.56%, while Brent crude fell 1.3% to $83.70 a barrel. The US Dollar Index edged up 0.1% to 100.5, and gold slipped 0.7% to $4,031 an ounce.
On Wall Street, markets closed higher on Wednesday, buoyed by softer inflation data and strong corporate earnings. Morgan Stanley reported second-quarter net income of $5.6 billion, a 58% increase from the previous year, while revenue rose 27% to $21.3 billion, causing its shares to gain 0.4%. BlackRock climbed 6.6% after posting stronger-than-expected results, while PayPal surged 17.2% following reports that Stripe and Advent International had submitted a joint takeover bid. The Dow Jones Industrial Average rose 0.29%, the S and P 500 gained 0.38%, and the Nasdaq Composite advanced 0.62%.
European markets presented a mixed picture, with concerns over the Middle East conflict offsetting weaker eurozone industrial production data, which showed a 0.2% month-over-month and 1.2% year-over-year decline in May. France's CAC 40 rose 0.19%, while Britain's FTSE 100 slipped 0.13%, Germany's DAX fell 0.59%, and Italy's FTSE MIB lost 0.85%.
Asian markets experienced significant selling pressure, particularly in the technology sector. SK Hynix fell 12% and Samsung Electronics dropped 8.6%, despite Taiwan Semiconductor Manufacturing Co. reporting a second-quarter net profit of $21.9 billion, surpassing market expectations of $19.3 billion. The Bank of Korea raised its benchmark interest rate by 25 basis points to 2.75%, marking its first increase in three and a half years, citing persistent inflation and the need to support the won. Japan's Nikkei 225 fell 2.6%, South Korea's Kospi dropped 6.8%, and China's Shanghai Composite lost 0.8%, while Hong Kong's Hang Seng Index rose 1.9%.