US inflation data boosts stocks
NEW YORK (Reuters) – An index of global equity markets rose to a three-week high on Thursday after data showed US inflation increased at its slowest pace since late 2015, boosting expectations that the Federal Reserve will hold off from increasing interest rates again this year.
The dollar pared advances against a basket of major currencies, while US Treasury prices gained slightly as simmering tensions with North Korea kept up demand for the safe-haven bonds.
US consumer spending rose slightly less than expected in July, and annual inflation increased at its slowest pace since late 2015. Investors’ focus turned to the monthly US payrolls report, to be released on Friday.
MSCI’s world index, which tracks shares in 46 countries, was boosted by a higher open on Wall Street and rose 0.44%.
In early afternoon trading, the Dow Jones Industrial Average rose 52.12 points, or 0.24%, to 21,944.55, the S&P 500 gained 10.05 points, or 0.41%, to 2,467.64, and the Nasdaq Composite added 37.21 points, or 0.58%, to 6,405.52.
European stocks rallied after Reuters reported that the euro’s rapid gains are worrying a growing number of European Central Bank policy makers, raising the chance asset purchases will be phased out only slowly. The pan-European STOXX 600 was up 0.85%.
The euro, which hit a more than two-year high against the dollar on Tuesday, slipped on the Reuters report.
The greenback retreated after the US inflation data and the dollar index, which measures the greenback against a basket of six major rivals, was little changed on the day, at 92.912, after rising as high as 93.347.
Gold prices rose as the dollar weakened, while rising security concerns created by tensions on the Korean peninsula supported sentiment.
Spot gold was up 0.56% to $1,315.71 an ounce.
In the bond market, benchmark 10-year US Treasury notes were up 5/32 in price to yield 2.1292%, down from 2.145% on Wednesday.
Trading volumes were relatively low, with some investors reluctant to buy Treasuries given that yields are near their lowest levels since November.
Oil prices rose, clawing back some of Wednesday’s losses. But US crude remained on track for the steepest monthly losses in more than a year on demand concerns after floods knocked out a quarter of US refining capacity.
Brent oil was up 2.32% to $52.04 a barrel. US crude was up 2.5% to $47.11.
Prices rallied in the oil-products markets, with US gasoline futures surging more than 13% to hit a two-year high well above $2 a gallon, buoyed by fears of a fuel shortage ahead of the Labor Day weekend that typically brings a surge in driving.