Thursday, May 30, 2024
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US stocks surge as oil price declines from recent peak

Global stocks rose on Thursday as oil prices dropped and Treasury yields fell, ahead of anticipated US and eurozone inflation data. Brent crude fell 1.2% to settle at $95.38 per barrel, while the US marker West Texas Intermediate lost 2% to $91.71. Wall Street’s S&P 500 gained 0.6%, and the Nasdaq Composite rose 0.8%. Crude prices have risen 35% since June due to supply cuts by major producers, adding to concerns over inflation.

Treasury yields, which have been rising as investors predict high interest rates to combat inflation, slipped back 0.04 percentage points on Thursday. However, European bond markets were affected by concerns about high interest rates, anaemic growth, and a widening budget deficit in Italy. The yield on the 10-year German Bund rose to its highest level since 2011, while the 10-year UK gilt was up 0.13 percentage points. European stocks rebounded, with the Stoxx Europe 600 index rising 0.4%.

Investors are closely watching US inflation figures to be released on Friday, with the “core” PCE index expected to have risen 3.9% year on year in August. Inflation in Germany and Spain came in below expectations, and eurozone inflation data is set to be published on Friday as well. The European Central Bank raised interest rates to an all-time high of 4% at its last meeting but indicated that further action would depend on future price data. Hong Kong’s Hang Seng index dropped 1.4%, reaching its lowest level in 10 months, while Japan’s Topix fell 1.4% and China’s benchmark CSI 300 lost 0.3%.

In summary, global stocks rose as oil prices fell and Treasury yields dipped ahead of key inflation data. Crude prices have risen significantly due to supply cuts by major producers, which contributed to concerns over inflation. While Treasury yields have been increasing in anticipation of high interest rates, European bond markets were affected by worries about interest rates, sluggish growth, and Italy’s budget deficit. Investors are closely monitoring US and eurozone inflation figures, as they will impact further interest rate decisions. Asian markets saw declines, with Hong Kong’s Hang Seng index reaching a 10-month low and Japan’s Topix falling.

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