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Oil risks keep markets wary before US CPI

Escalating threats to shipping in the Middle East kept oil prices elevated on Wednesday, adding to concerns that the conflict could rekindle inflationary pressures. US equities ended Tuesday modestly lower, while Asian trading was mixed: Korean and Japanese shares advanced on technology-sector strength, but Hong Kong stocks declined. Investors will focus on US consumer-price data due on Wednesday for clues on whether inflation is easing despite the renewed energy-market risks.

  • Date
  • Author Shane Strowmatt, Senior Investment Writer
  • Reading time 5 minutes

Inflation shown with icons

Oil prices rose on Wednesday after attacks in the Red Sea and Gulf of Oman heightened concerns over supply routes despite indications that the US and Iran could agree to reopen the Strait of Hormuz. Brent crude oil futures rose 0.6% to USD 89.44 per barrel, while West Texas Intermediate (WTI) futures gained 0.6% to USD 83.71 per barrel. Six people were killed when Iran-backed Houthi rebels attacked a cargo vessel in the Bab el-Mandeb Strait on Tuesday, while US forces later fired on a container ship that allegedly breached Washington’s blockade of Iranian ports.

Asian technology stocks advance

Asian equities mostly rose on Wednesday, led by a 3.5% jump in Korea’s KOSPI as shares in Samsung Electronics, SK Hynix and LG Innotek rallied on reports that Temasek may invest in the companies. Japan’s Nikkei 225 gained 0.8%, while mainland China’s CSI 300 rose 0.3% to 4678.30 points, but Hong Kong’s Hang Seng Index fell 1.2% as major technology companies including Alibaba and Tencent declined. Strong results from AI infrastructure companies supported sentiment, although rising oil prices kept investors cautious before July US consumer-price data.

US stocks decline despite Iran hopes

US equity markets fell on Tuesday as tentative signs of progress towards an agreement in the Iran conflict failed to ease investors’ concerns for long. The Dow Jones Industrial Average lost 0.3% to 53,791.85 points, while the S&P 500 and Nasdaq-100 declined 0.3% to 7728.20 and 29,525.48 points, respectively. Oil prices recovered after an initial decline on Tuesday, with anticipated supply disruptions through the Strait of Hormuz sustaining inflation concerns ahead of July’s US consumer-price data on Wednesday.

Euro Stoxx reaches record high

European equities rose on Tuesday after signs that the US and Iran may be nearing an agreement in their conflict briefly lowered oil prices and supported risk appetite. The Euro Stoxx 50 gained 0.3% to a record 6553.85 points, while the Swiss Market Index fell 0.4% to 14,575.25 points after reaching an intraday high. Technology shares advanced, with semiconductor-equipment maker ASML rising 2.7% and Siemens Energy gaining 2.6%, while Adidas declined 3.1% after disappointing quarterly revenue from Swiss running-shoe maker On Holding. Swiss eye-care group Alcon climbed 4.7% after its half-year results exceeded expectations.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Cisco, E.ON, Hannover Re, and Tencent.

Economic data in focus: German Consumer Price Index (08:00), Italian Consumer Price Index (10:00) and US Consumer Price Index (14:30).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.