Oil Climbs, Global Shares Mixed as Markets Await US Inflation Signal

Global markets traded unevenly on Wednesday as investors awaited the US inflation report for July, while oil prices climbed on concerns over Middle East supply disruptions.

US S&P 500 futures rose 0.2 per cent, while Dow futures were nearly flat. In Europe, Germany’s DAX gained 0.3 per cent to 26,480.04, whereas Paris’s CAC 40 slipped 0.2 per cent to 8,698.79. Britain’s FTSE 100 edged down 0.1 per cent.

Asian markets were mixed. Tokyo’s Nikkei 225 advanced 0.8 per cent to 67,524.06. South Korea’s Kospi jumped 3.7 per cent, led by chipmakers. Samsung Electronics surged 6.7 per cent and SK Hynix rose 5.5 per cent. Taiwan’s Taiex added 0.9 per cent.

China’s Shanghai Composite gained 0.3 per cent, while Hong Kong’s Hang Seng fell 0.8 per cent. Australia’s S&P/ASX 200 declined 0.5 per cent.

Oil prices strengthened amid uncertainty over shipping and crude supplies. Brent crude rose 1 per cent to USD 89.79 a barrel, while US benchmark crude gained 1 per cent to USD 84.07.

The conflict involving the US, Israel and Iran has disrupted the Strait of Hormuz, a key oil route. Concerns also grew after Iran-backed Houthi rebels attacked a vessel near the Bab el-Mandeb strait, raising shipping concerns.

Oxford Economics forecast Brent could average USD 85 a barrel this year before easing towards USD 65 by late 2027.

Higher oil prices are adding to inflation pressures. US gasoline averaged USD 4.01 a gallon, up from USD 3.14 a year earlier, according to AAA.

Investors are now focused on the US inflation reading. Economists expect July inflation to ease to 3.4 per cent, from 3.5 per cent in June.

A softer reading could reduce pressure on the Federal Reserve to raise rates. Higher rates can restrain inflation but increase borrowing costs and pressure equities further.

On Tuesday, the S&P 500 fell 0.3 per cent, while the Dow lost 184 points and the Nasdaq dropped 0.6 per cent. Treasury yields remained elevated, while the dollar eased to 159.22 yen.