The Japan Times - Stocks gain as US inflation worries ease, oil slips

Oil prices fell back from recent gains amid uncertainty over the prospects for Gulf shipments from the Strait of Hormuz, helping the positive momentum in thin summer trading.

After a benign reading on US consumer inflation a day earlier, the US Labor Department said Thursday that producer prices rose 4.7 percent in July, down from June and below the 4.9 percent rise forecast by analysts' estimates.

The reading bolstered expectations that Federal Reserve officials would not feel obliged to raise borrowing costs quickly, which might translate into slower economic growth.

"A September interest rate hike -- as we've been forecasting -- is now looking unlikely," said Stephen Brown, an economist at Capital Economics.

Wall Street indexes jumped at the open, again flirting with record highs, while European equities were little changed after a mixed performance in Asia.

Seoul's Kospi was an outlier, jumping 3.6 percent thanks to chipmakers SK hynix and Samsung as investors returned to AI names.

The index had tumbled 40 percent by early August since hitting a record high in June. It has since recovered by about 20 percent.

London's stock market, however, fell as shares in heavyweight mining companies retreated after copper giant Antofagasta downgraded its production outlook.

The warning offset official data showing that UK economic growth proved resilient in the second quarter despite slowing compared to the first three months of the year.

The dollar softened as the prospect of higher US interest rates eased, meaning investors were less likely to pile money into US bonds for now.

But with inflation still running above the Fed's two-percent target for more than five years -- and with the Iran war keeping oil prices elevated -- Fed officials are expected to tighten borrowing costs at some point.

"For now, markets can celebrate the absence of a September hike trigger," said Patrick Munnelly, market strategist at Tickmill Group.

However, "the risk is that easy financial conditions and resilient demand make the next inflation scare harder to dismiss", he said.

Expectations that inflation will remain elevated saw an auction of 10-year US Treasuries -- a key guide for interest rates -- result in the highest yield since during the global financial crisis of 2007.

Oil prices shed more than two percent Thursday despite no signs of a deal being struck to end the US-Iran war.

A senior Iranian official said the Strait of Hormuz remained under the control of the Islamic republic after President Donald Trump claimed US control over the strategic waterway.

- Key figures around 1400 GMT -

New York - DOW: UP 0.4 percent at 53,985.44 points

New York - S&P 500: UP 0.7 percent at 7,805.26

New York - Nasdaq: UP 0.9 percent at 26,825.00

London - FTSE 100: DOWN 0.4 percent at 10,789.00

Paris - CAC 40: DOWN 0.1 percent at 8,666.98

Frankfurt - DAX: UP 0.2 percent at 26,380.72

Tokyo - Nikkei 225: UP 1.2 percent at 68,308.59 (close)

Hong Kong - Hang Seng Index: DOWN 0.2 percent at 25,396.51 (close)

Shanghai - Composite: DOWN 0.5 percent at 3,926.96 (close)

Brent North Sea Crude: DOWN 2.9 percent at $86.43 per barrel

West Texas Intermediate: DOWN 3.1 percent at $80.73 per barrel

Euro/dollar: UP at $1.1534 from $1.1522 on Wednesday

Pound/dollar: UP at $1.3501 from $1.3491

Dollar/yen: DOWN at 159.29 yen from 159.50 yen

Euro/pound: UP at 85.44 pence from 85.40 pence

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H.Nakamura--JT