Rising oil prices helped support global stocks Thursday, while investors mulled the chances of a U.S. interest-rate cut amid worries trade tensions would drag global growth lower.
U.S. shares, measured by the S&P 500 Index, gained 0.3%, while the Dow Jones Industrial Average rose 86 points in the opening minutes of trading in New York. The Nasdaq Composite advanced 0.4%. U.S. energy companies had been rising in premarket trading, with both
up 1.1% before the bell.
In Europe, the Stoxx Europe 600 rose 0.2% in midday trading. A jump in the price of oil helped to support shares of European oil companies. That lifted the Stoxx Europe 600’s oil-and-gas subindex by 0.5%.
Crude’s gains came after two oil tankers in the Gulf of Oman were damaged in attacks. Tensions between Iran and the U.S. have run high since an assault on four tankers in May. The region’s waters are crucial for the transportation of oil and fears that tensions would crimp supply pushed Brent crude up 3.8% to $62.64 a barrel..
The tensions in the Middle East also lifted haven assets. Gold prices climbed 0.2% to $1,336.78 a troy ounce, while the yield on the 10-year U.S. Treasury note, which falls as prices rise, slipped to 2.113% after settling at 2.129% Wednesday.
Stocks across the globe began the week higher as investors welcomed hints from the Federal Reserve that it might lower interest rates. Those hopes have been tempered in recent sessions by questions over whether U.S. economic data would prove weak enough for the central bank to act.
Data released Wednesday showed U.S. inflation slowed in May. Annual consumer prices rose 1.8% in May, lower than the 2% in April and below a WSJ consensus forecast of 1.9%. While the reading boosted the case for a rate cut, investors were debating whether pressure on the Fed from markets and the Trump administration would be sufficient to prompt the central bank to move.
“The market is clearly telling the Fed…that policy is too tight for an economy that is running with low inflation,” said Katie Nixon, chief investment officer at Northern Trust’s wealth-management business. “The only question right now is will the Fed listen?”
Ms. Nixon said the central bank was in difficult position, as it seeks to avoid appearing to bow to pressure from President Trump, who has repeatedly chastised it for raising interest rates. A meeting of the central bank’s policy-making body next week might provide an opportunity for it to acknowledge the inflation data and offer more hints of a coming cut.
In Asia, stocks in Shanghai and Shenzhen posted modest advances, while Japan’s Nikkei fell 0.5%. Hong Kong’s Hang Seng was down 0.1% after paring back on heavier early losses amid violent protests in the city against unpopular legislation that would make it easier to extradite people to China.
Some analysts were concerned the growing protests could derail a trade deal between the U.S. and China should Washington speak out publicly in support of the movement.
Analysts now see a possible meeting between Mr. Trump and Chinese President Xi Jinping at the G-20 summit this month as crucial to securing a deal as negations between the two powers have become more fraught.
“Trump may bring it up with China at the G-20 and the argument is that any interference would likely heighten tensions between the U.S. and China at what is clearly already a very tense time. So it’s a situation which is worth following,” said Jim Reid a strategist at Deutsche Bank.