Global equity markets experienced modest gains on Wednesday as investors processed stronger-than-anticipated US inflation figures and awaited the quarterly earnings report from chipmaker Nvidia. Meanwhile, ongoing tensions in the Middle East contributed to volatility in oil markets.
MSCI’s global equity index recorded a slight increase after data revealed that US annual inflation remained unchanged in July, continuing to exceed the Federal Reserve’s 2% target for the 65th consecutive month. Additional government statistics showed a modest slowdown in US consumer spending during July, while personal incomes rose at a pace surpassing inflation.
These figures heightened investor caution regarding the future trajectory of US interest rates. On Wall Street, the three major stock indices closed marginally lower following the inflation report. James Ragan, co-chief investment officer at D.A. Davidson, noted that the market had been seeking a reason to retreat slightly but suggested the recent data was unlikely to prompt the Federal Reserve to adjust rates at its September meeting.
Investor attention also centered on Nvidia’s upcoming earnings announcement, which is expected to serve as a critical indicator of market sentiment toward the artificial intelligence sector. The company’s second-quarter results and financial outlook will be closely scrutinized, particularly its commentary on financing the AI spending surge.
In the energy sector, oil prices fluctuated throughout the session before closing lower as markets monitored developments around the Strait of Hormuz, a vital passage for global energy shipments. A senior Iranian official indicated that Iran and Oman were still negotiating the specifics of an agreement on the waterway, contradicting earlier claims by Iran’s Revolutionary Guards that a deal on usage and revenue sharing had been reached. The Guards’ spokesperson also stated that the strait would remain closed unless the United States met Tehran’s conditions.
This uncertainty has kept energy markets on edge, with investors evaluating the potential consequences for global oil supplies and maritime traffic. Following the inflation data release, the US dollar strengthened while gold prices retreated from a three-month peak as investors recalibrated their interest rate expectations.
Market participants remained cautious ahead of Nvidia’s earnings and continued to monitor geopolitical developments, balancing corporate earnings prospects against inflation concerns and Middle East risks. Ragan commented that the economy appeared stable without signs of acceleration, describing the situation as “more of the same.”
The Dow Jones Industrial Average declined by 113.52 points, or 0.21%, closing at 53,463.88. The S&P 500 slipped 1.58 points, or 0.02%, to 7,675.70, while the Nasdaq Composite dropped 21.10 points, or 0.08%, to 26,130.20. Conversely, MSCI’s global stock gauge rose 0.04% to 1,150.06. The pan-European STOXX 600 index ended nearly flat, down 0.01%.
Energy market trading remained volatile as investors tracked Iran-Oman negotiations and assessed a smaller-than-expected increase in US crude inventories. US crude settled 0.16% lower at $82.23 per barrel, while Brent crude closed down 0.84% at $87.84 per barrel.
Oil price fluctuations also influenced the bond market. US Treasury yields edged higher following the inflation data, with the 10-year note yield rising to 4.647% and the 30-year bond yield slightly decreasing to 5.1682%. The 2-year note yield, which closely reflects Federal Reserve rate expectations, increased to 4.211%.
Market odds for steady interest rates in September rose to approximately 64%, up from 60.4% the previous day, while expectations for a 25 basis point hike dropped to 36% from nearly 40%, CME Group’s FedWatch Tool. Nonetheless, rate increases remain anticipated by year-end.
In currency markets, the dollar gained strength following the economic data, with the dollar index rising 0.24% to 99.15. The euro declined 0.18% to $1.1653, and the dollar appreciated 0.12% against the Japanese yen to 159.35.
Gold prices fell after reaching their highest levels since mid-May on Tuesday. Spot gold dropped 1.32% to $1,959.33 an ounce, while US gold futures declined 0.65% to $1,960.80 an ounce.
