US equities gain as inflation report eases fear of rate rise / Photo: © AFP
US equities gain as inflation report eases fear of rate rise
US equities inched up and the dollar slipped Wednesday as July's inflation data came in as expected, taking pressure off the Federal Reserve to increase interest rates.
US consumer inflation slowed slightly to 3.4 percent in July from 3.5 percent the previous month, in line with analyst forecasts.
New York's three main indexes were all higher in morning trading.
At mid-afternoon in Europe, Paris and London were lower, and Frankfurt higher.
Oil prices eased as they tracked developments in the Middle East. The dollar was down slightly against its peers.
"The July CPI report, at the least, did not stoke new concerns that the Fed will have to raise rates at the September FOMC meeting. That is the key takeaway from the report," said Patrick J. O'Hare, an analyst at Briefing.com.
Wednesday's inflation number follows a report last week showing the world's top economy lost more than 20,000 jobs in July, indicating a slowing economy.
But at the central bank's last decision-making meeting in July, three board members called for a rate increase, dissenting from the final decision to hold rates steady, as US inflation has held stubbornly above the Fed's two-percent target for more than five years.
"Although inflation remains elevated, today's report should give investors greater confidence that peak inflation appears to be behind us," said etoro US investment analyst Bret Kenwell.
"With the odds of a September rate hike sitting near 50-50, disappointing jobs and GDP data have investors debating how much urgency the Fed actually faces to raise rates," he said.
There will be one more CPI release and another jobs report before the Fed's next meeting in September.
Oil prices stabilised Wednesday after big swings in recent weeks as US-Iran war tensions ebbed and flowed.
Pakistan's interior minister was visiting Iran to discuss regional security, stability and other developments, as Islamabad tries to mediate a resolution to the conflict.
It comes as the International Energy Agency sharply reduced its forecast for global oil demand this year, as supplies remain crimped by the closure of the Strait of Hormuz and high prices deter buyers.
Demand is expected to slump by 1.6 million barrels per day compared with its forecast slump of one million in its July report.
- Key figures around 1340 GMT -
New York - DOW: UP 0.2 percent at 53,872.85 points
New York - S&P 500: UP 0.4 percent at 7,757.66
New York - Nasdaq Composite: UP 0.7 percent at 26,638.91
London - FTSE 100: DOWN 0.2 percent at 10,824.98
Paris - CAC 40: DOWN 0.3 percent at 8,686.01
Frankfurt - DAX: UP 0.3 percent at 26,476.62
Tokyo - Nikkei 225: UP 0.8 percent at 67,524.06 (close)
Hong Kong - Hang Seng Index: DOWN 0.8 percent at 25,440.17 (close)
Shanghai - Composite: UP 0.3 percent at 3,946.68 (close)
Brent North Sea Crude: DOWN 0.6 percent at $88.38 per barrel
West Texas Intermediate: DOWN 0.5 percent at $82.76 per barrel
Euro/dollar: UP at $1.1557 from $1.1542 on Tuesday
Pound/dollar: UP at $1.3550 from $1.3506
Dollar/yen: DOWN at 158.87 yen from 159.27 yen
Euro/pound: DOWN at 85.40 pence from 85.46 pence
burs-bcp/ajb/gv/st
(P.Vasilyevsky--DTZ)
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