MSCI's global equities index increased on Wednesday, driven by an unexpected drop in US inflation and robust second-day earnings reports. US producer prices for June were softer than anticipated, declining 0.3% against forecasts for no change, serving as another indicator, following Tuesday's consumer price data, that inflation was receding before the recent Middle East escalation. This positive economic data, coupled with Federal Reserve Chair Kevin Warsh's commitment to fighting inflation in his congressional testimony, fueled investor confidence.
US equities recorded gains, with the Dow Jones Industrial Average rising 150.37 points (0.29%) to 52,658.64, the S&P 500 climbing 28.81 points (0.38%) to 7,572.40, and the Nasdaq Composite increasing 162.22 points (0.62%) to 26,269.23. The MSCI World Price Index also rose 7.06 points (0.63%) to 1,128.63. Investors largely focused on these economic signals and strong corporate earnings, including Morgan Stanley's second-quarter profit increase due to mergers and acquisitions, BlackRock's profit surge from boosted client asset values, and Johnson & Johnson's sales and profit exceeding analyst expectations.
Oil futures closed slightly higher, with US crude settling up 0.33% ($0.26) at $79.60 a barrel and Brent settling at $84.95 per barrel, up 0.26% ($0.22). This was supported by stronger-than-expected inventory data and traders mostly overlooking new US attacks on Iranian military installations aimed at curbing Iran's ability to disrupt shipping in the Strait of Hormuz. Despite oil prices already reaching their highest levels in a month on Monday, the market seemed to have already priced in the geopolitical tensions.
In the bond market, US Treasury yields fell for a second consecutive day, with the benchmark 10-year Treasury note yield decreasing 3.17 basis points to 4.553% and the 30-year bond yield falling 0.44 basis points to 5.0896%. This decline was attributed to the easing price pressures indicated by the inflation data, reinforcing hopes that the Federal Reserve might remain patient on interest rates. The dollar also slipped against major currencies after the inflation data, with the dollar index falling 0.36%. Gold prices saw a slight increase, with spot gold rising 0.13% to $4,059.01 an ounce.
