By Chris Prentice and Stefano Rebaudo
NEW YORK/MILAN, Aug 13 (Reuters) – Global equities rose on Thursday as investors pared back U.S. rate hike bets, while oil prices dropped as higher inventories and lower global demand forecasts offset geopolitical concerns.
U.S. producer price data, which was unchanged in July, reduced expectations for a Federal Reserve rate hike next month, helping tech stocks power the S&P 500 to an intraday record high.
Traders scaled back their bets on a September rate hike, pricing in a 65% probability of the Fed staying on hold next month versus 50% on Wednesday.
Gold prices fell and U.S. Treasury yields extended their decline after the producer price data.
MSCI’s gauge of stocks across the globe rose 5.33 points, or 0.46%, to 1,159.86.
TECH BOOSTS WALL STREET
The Dow Jones Industrial Average fell 3.55 points, or 0.01%, to 53,766.72, the S&P 500 rose 47.53 points, or 0.61%, to 7,796.03 and the Nasdaq Composite rose 209.79 points, or 0.79%, to 26,798.27.
“Earnings season (for AI infrastructure names) has been strong and shows no signs of slowdown in capex,” Mohit Kumar, an economist at Jefferies, said, before stating the bank remained with an overweight position in the AI sector.
“The background of high amounts of cash in the system and Fed not hiking (Jefferies view) should continue to support risky assets,” he added.
European shares were muted as investors awaited euro zone inflation data following a strong earnings season. Weaker commodity prices also weighed on energy and mining shares.
The pan-European STOXX 600 closed little changed at 659.24 points. The benchmark retreated from record highs in the previous session.
MSCI’s broadest index of Asia-Pacific shares outside Japan closed up 0.96% and emerging market stocks rose 0.85% to 1,696.17.
US-IRAN DEADLOCK
Washington and Tehran traded accusations on Thursday over a deal to reopen the strategically vital Strait of Hormuz, with the United States saying Iran had failed to meet its obligations and Iran countering that Washington had not delivered on ending a blockade of Iranian ports.
Still, Brent crude futures fell 1.48% to $87.66 per barrel, after starting the week with a 5% jump. U.S. crude dropped 1.67% to $81.88.
Commercial crude oil inventories posted their largest weekly gain since January 2023, and the Organization of the Petroleum Exporting Countries lowered its world oil demand growth forecast for 2026.
High energy prices are expected to weigh more heavily on the economies of the euro zone and Japan, both large energy importers, while the United States is seen as relatively insulated from oil shocks.