Global Markets Surge Amid Shift in U.S. Interest Rate Expectations

Global equities experienced a rise as investors adjusted their expectations regarding U.S. interest rate hikes. Meanwhile, oil prices declined due to increased inventories and reduced demand forecasts, despite geopolitical tensions. U.S. producer price data stayed flat, reducing Federal Reserve rate hike expectations next month and boosting tech stocks in the S&P 500.

Global equities saw an upward trend on Thursday as investors recalibrated their expectations for U.S. interest rate hikes. Simultaneously, oil prices dipped as increased inventories and lowered global demand forecasts countered ongoing geopolitical concerns.

U.S. producer price data remained unchanged in July, diminishing the likelihood of a Federal Reserve rate hike next month, which in turn propelled tech stocks to drive the S&P 500 to a new intraday record high. Consequently, traders reduced their expectations for a September rate hike, assigning a 65% chance of rates remaining steady compared to a 50% probability the day prior.

Oil futures declined sharply despite tensions between the U.S. and Iran. While commercial crude inventories displayed their largest surge since January 2023, OPEC revised its global oil demand growth forecast downward for 2026, pressuring the euro zone's economic stability and other major energy importers like Japan.