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Global stocks rose on Thursday, driven by a drop in oil prices ahead of much-anticipated U.S. and euro zone inflation data.
Brent crude fell 1.2% to settle at $95.38 a barrel, having earlier risen above $97, its highest level since November. U.S. West Texas Intermediate crude fell 2% to $91.71.
By mid-afternoon, Wall Street’s benchmark S&P 500 was up 0.7%, while the tech-heavy Nasdaq was up 0.8% in New York trading.
Brent crude prices have been approaching $100 a barrel in recent weeks amid worries about global supplies, worries heightened by a weekly U.S. government report on Wednesday showing a further decline in inventories at key delivery hubs.
Since June, some of the world’s largest oil producers have announced that production cuts will continue until the end of this year, and crude oil prices have risen 35%, exacerbating investors’ concerns about continued inflation.
“The biggest question mark on the inflation outlook is the evolution of fuel prices,” ING analyst Wouter Thierie said.
“The danger . . . is that if oil prices remain high for an extended period of time, businesses will increasingly pass on higher fuel prices, causing them to trickle back into core inflation.”
In Europe, the Stoxx Europe 600 index closed up 0.4%, ending five consecutive days of losses. France’s CAC 40 index rose 0.6% and Germany’s Dax index rose 0.7%.
Although oil prices retreated late Thursday, the recent gains have rattled bond markets.
On Thursday, the 10-year UK government bond yield rose 0.13 percentage points to 4.48%. When prices fall, bond yields rise.
The European regional benchmark 10-year German government bond yield rose 0.09 percentage points to 2.93%, reaching its highest level since 2011.
The euro rose 0.6% to $1.056, just above a nine-month low.
Investors turned their attention to closely watched U.S. inflation data due on Friday. The “core” PCE index, often considered the Fed’s preferred inflation gauge, is expected to increase 3.9% annually in August, down from 4.2% last month.
German data on Thursday showed inflation slowed more than expected to its lowest level in two years, while Spanish data also came in below expectations. Eurozone inflation data will also be released on Friday.
The European Central Bank raised interest rates to a record high of 4% at its last meeting and signaled its historic move may be over unless surprises in price data prompt policymakers to take further action.
“Today’s and tomorrow’s inflation data are likely to be scrutinized by the data-reliant ECB and play a central role in the next interest rate announcement in October,” said SEB euro zone economist Pia Fromlet.
In Asia, Hong Kong’s Hang Seng Index fell 1.4%, hitting its lowest level in 10 months, while China’s benchmark CSI 300 index fell 0.3%. Japan’s Topix fell 1.4%.
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