Global stocks hold gains after in-line US CPI

Global stock markets maintained their rise on Wednesday following U.S. inflation data that aligned with expectations, while oil prices exhibited a modest uptick following an Iranian official's statement to Reuters about a lack of discussions to extend a ceasefire. The U.S. Consumer Price Index rose by 0.1% last month, following a 0.4% decline in June, consistent with a Reuters poll of economists and analysts.

Annual CPI inflation decelerated to 3.4% from 3.5% in the prior month. Inflation appears to be moving in the desired direction, and with Federal Reserve Chair Kevin Warsh emphasizing restraint in providing guidance, the market sentiment is likely to remain positive, according to Richard Carter, head of fixed interest research at Quilter Cheviot.

Traders placed bets favoring a slight interest rate hold for the upcoming meeting, with markets indicating a 55% probability of the Federal Reserve maintaining its policy rate within the 3.50% to 3.75% range. Stock futures for U.S. equities, the S&P 500 e-minis, were up 0.4%, sustaining their gains after the data release. Nasdaq futures climbed 0.8%, bolstered by CoreWeave's positive earnings results on Tuesday, further fueling enthusiasm in the AI sector.

European stock indexes, including the STOXX 600, experienced slight gains of around 0.2%. Major stock exchanges in Frankfurt, Paris, and London saw modest increases ranging from 0.1% to 0.4%. In Asia, stocks also rose by 0.9%, driven by strong gains in South Korean, Japanese, and Taiwanese markets, particularly in chipmaking sectors.

Discussions aimed at resolving the Iran conflict and reopening the Strait of Hormuz for shipping continued, with a senior Iranian official confirming no negotiations to extend the ceasefire, as Tehran considers the agreement without a defined start date. Despite the ongoing negotiations, market participants remain relatively calm, as global stock indexes are nearing record highs.

Dorian Carrell, head of multi-asset income at Schroders, highlighted a gradual de-escalation of tensions as the long-term outlook. Oil prices experienced a 0.7% increase to $83.71 per barrel for U.S. crude and 0.3% to $89.19 per barrel for Brent, both poised to extend their five-day winning streaks. Both benchmarks closed more than $1 higher on Tuesday, marking their best levels since July 31, and continued their upward trajectory following a 5% surge on Monday.

In the currency markets, the dollar index fell to 99.69, with the euro and British pound showing slight gains following the U.S. inflation report. The yen strengthened by 0.3% to 158.81 per dollar but remained below last week's peak of 155.20 following potential intervention. Gold prices rose by 1.4% to $4,428 per ounce, while silver increased by 2.9% to $66.47 per ounce.