European stocks remained largely steady on Wednesday as investors took a cautious approach ahead of key U.S. inflation data, while oil prices continued to climb amid renewed uncertainty over the Iran conflict. The pan-European STOXX 600 was little changed in early trading, while major markets in Frankfurt, Paris and London hovered close to flat as traders waited for fresh clues about the direction of global monetary policy.
Oil markets, however, continued to feel the heat from rising tensions in the Middle East. U.S. crude gained 0.8% to $83.89 a barrel, while Brent crude rose 0.7% to $89.49, putting both benchmarks on course for a sixth consecutive daily gain. The latest increases came after reports of further attacks on shipping and growing uncertainty over the future of the Strait of Hormuz, a crucial route for global oil supplies.
The renewed tensions have raised concerns that higher energy prices could keep inflation elevated and put additional pressure on economies already facing uncertainty over interest rates and growth. Investors had hoped for signs of progress toward an end to the Iran war, but recent developments have made the outlook less certain. Analysts now expect restricted shipping through the Strait of Hormuz to continue supporting oil prices and adding to inflationary pressures in the months ahead.
Attention is now firmly on the U.S. Consumer Price Index (CPI), with markets looking for clues about the Federal Reserve’s next move. Consumer prices are expected to rise 0.1% in July after falling 0.4% in June, while annual inflation is forecast to ease slightly to 3.4% from 3.5%. Markets are currently pricing in roughly an even chance of a Federal Reserve rate hike at its September meeting, making the inflation figures particularly important for investors.
Elsewhere, Asian stocks gained 0.7%, led by a strong 3.7% rise in South Korea’s Kospi, while Japan and Taiwan also advanced as chipmakers rallied. U.S. stock futures edged higher, supported partly by upbeat results from AI cloud company CoreWeave, while gold climbed 1% to $4,409 an ounce and silver gained 2% to $66.04. With inflation, interest rates, oil and geopolitical tensions all pulling markets in different directions, investors remain on alert for the next signal that could determine where global markets head next.
source: Reuters
