Stock markets rose Thursday as highly anticipated official data showed that US consumer inflation inched up in July but held at a moderate level.
The new figures come against a backdrop of renewed concerns that the Federal Reserve could announce another interest-rate hike before the end of the year.
Oil prices dipped on profit-taking, a day after reaching multi-month highs on worries about Russian supplies following a Ukrainian attack on one of the country’s tankers.
Output cuts by Moscow and OPEC giant Saudi Arabia were also providing strong support to the market, analysts said.
The feel-good factor that characterised much of July has given way to uncertainty about the US central bank’s plans amid warnings from policymakers that more is needed to finally get prices under control.
Ongoing weakness in China’s economy — and lack of concrete action by the authorities to address it — has also been taking a toll on investor sentiment, helping to drive a retreat in global markets in recent weeks.
Traders had keenly awaited Thursday’s US government data, which showed that the consumer price index (CPI) — a key inflation gauge — rose 3.2 percent from a year ago last month, slightly up from June’s 3.0 percent pace and breaking a streak of cooling figures.
The closely watched gauge of inflation plays a key role in the Fed’s decision-making on monetary policy.
The latest CPI number remains moderate compared with last year’s figures.
Interest-rate hikes have dampened steep American price rises from a four-decade high of 9.1 percent in June last year.
However, their longer-term target is for inflation of two percent.
The US central bank hiked rates in July but officials have said they would remain data dependent when making further rate decisions.
“There will be some calls that next month’s report won’t look as friendly given the jump in oil and gas prices,” Patrick O’Hare from Briefing.com said.
“But for the time being, the July report offered enough validation for the Fed not to jump to any rate-hike conclusions.”
US stocks pushed higher, while Europe’s main markets mostly closed with solid gains.
Close eye on China
Luxury and travel firms boosted Eurozone markets after China lifted a Covid-era ban on outbound group tours to dozens of countries, which could see crowds of Chinese tourists return to destinations around the world.
Investors were keeping tabs on China, hoping for measures to support the ailing economy, after news that the country had slipped into deflation for the first time in more than two years and exports plunged at their fastest pace since the early days of the Covid pandemic.
With China being a key driver of global growth, the long-running slowdown is fuelling concerns about possible spillover effects.
There was also a little nervousness after President Joe Biden signed an executive order directing the Treasury to restrict certain US investments in China in sensitive high-tech sectors, including semiconductors, quantum computing and artificial intelligence.
Beijing hit out at the move, saying it “severely disrupts the security of global industrial and supply chains”.
Key figures around 1550 GMT
London – FTSE 100: UP 0.4 percent at 7,618.60 points (close)
Frankfurt – DAX: UP 0.9 percent at 15,996.52 (close)
Paris – CAC 40: UP 1.5 percent at 7,433.62 (close)
EURO STOXX 50: UP 1.6 percent at 4,384.04
New York – Dow: UP 0.6 percent at 35,326.51
Tokyo – Nikkei 225: UP 0.8 percent at 32,473.65 (close)
Hong Kong – Hang Seng Index: FLAT at 19,248.26 (close)
Shanghai – Composite: UP 0.3 percent at 3,254.56 (close)
Euro/dollar: UP at $1.1019 from $1.0975 on Wednesday
Pound/dollar: UP at $1.2724 from $1.2720
Euro/pound: UP at 86.59 from 86.26 pence
Dollar/yen: UP at 144.40 yen from 143.38 yen
West Texas Intermediate: DOWN 0.9 percent at $83.64 per barrel
Brent North Sea crude: DOWN 0.6 percent at $87.10 per barrel