Oil dips on demand forecasts, global equities gain

Global equities experienced an uptick on Wednesday as mild inflation data bolstered expectations that the Federal Reserve would refrain from raising interest rates, while oil prices saw a slight rise due to investors balancing lower demand with ongoing U.S.-Iran negotiations. The United States and Yemen's Iran-aligned Houthis both reported separate attacks on ships.

However, oil prices eventually declined as investors considered lower demand forecasts. U.S. consumer prices rose by 0.1% in July, aligning with expectations, and this modest increase might undermine the argument for a rate increase from the Federal Reserve next month. Money markets indicated a roughly 50% probability of a hike heading into the release of this data.

The data alleviated some concerns that the Fed was being pushed towards a rate hike due to inflation, which is being fueled by higher energy prices, according to Robert Pavlik, a senior portfolio manager at Dakota Wealth Management in Fairfield, Connecticut. Gold prices reached their highest level in over two months as the data dampened rate hike expectations.

U.S. Treasuries gained, pushing yields higher. MSCI's global stock index increased by 0.34%, while key U.S. indices like the Dow Jones, S&P 500, and Nasdaq Composite saw slight declines. European and Asian markets also experienced minor changes. Meanwhile, talks to end the Iran war and restore shipping through the Strait of Hormuz continued.

The U.S. and Iran's Iranian-aligned Houthis each claimed ship attacks on Tuesday, with both Iran and the U.S. increasing their rhetoric. Iran's senior security official warned that the Strait of Hormuz would remain closed unless the U.S. accepted Iran's conditions. Despite the ongoing tensions, markets have remained relatively calm, with investors maintaining a long-term view of a gradual but uneven de-escalation.