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Oil gains for the first time in five days, world shares mixed

On Wednesday, global shares were mixed, with European shares declining and most major Wall Street indexes gaining, while U.S. Treasury yields mostly increased. U.S. president Donald Trump has issued an executive directive imposing an extra 25% tariff on goods coming from India. He claims that the country imported Russian oil.

After four days of falling oil prices, the tariffs and an unexpectedly large draw on U.S. crude oil lifted oil price.

The MSCI index of global stocks rose by 0.22%, to 929.26.

The Dow Jones Industrial Average fell 0.14%, to 44,049.38. Meanwhile, the S&P500 edged up by 0.11%, to 6,306.23, and the Nasdaq Composite grew 0.23%, to 20,964.46.

The broad STOXX 600 Index in Europe has declined, with the last decline of 0.15%.

The broadest MSCI index of Asia-Pacific stocks outside Japan fell by 0.08%, closing at 654.33, while Japan’s Nikkei gained 245.32 points or 0.60% to 40,794.86. Wall Street's performance on Tuesday was impacted by the health of the U.S. Economy. Data showed that services sector activity had unexpectedly plateaued in July. This reinforced the message of Friday's weak jobs data which led markets to increase their bets that the Federal Reserve would cut rates in September.

Samy Chaar is the chief economist of Lombard Odier. He said that there's a tug-of war between the concrete signs we have seen that show the U.S. economic slowdown and the fact that rates are going down, which will remove some pressure on valuations.

The focus of traders has been on the tariff impact.

"The market seems to be more concerned with the fact we won't get maximalist tariffs. But I wonder if they aren't paying enough attention to the fact we could still see more moderate tariffs in the future, such as on pharmaceuticals," Chaar said. Trump said on Tuesday that he will announce tariffs on chips and semiconductors in the coming week. The U.S. will initially impose a'small tariff' on pharmaceutical imports, before increasing the tariff substantially over the next year or two. He said that the U.S. and China were close to a deal on trade, and he planned to meet with his Chinese counterpart Xi Jinping by the end of this year if a deal was reached. Treasury yields have risen on the government bond markets. This week, the Treasury market will see an increase in supply with the release of $42 billion worth of 10-year bonds on Wednesday and $25 milliards in 30-year bond on Thursday.

FedWatch from the CME shows that Fed funds futures indicate a 94% probability of a rate reduction next month. At least two rate cuts are priced in this year. Investors await Trump's choice to fill the upcoming vacancy on Fed board of Governors. Trump announced that a decision would be made shortly, but ruled out Treasury Secretary Scott Bessent, who is currently the Fed's chief and whose tenure ends in 2026.

European currencies gained. The euro rose 0.46% to $1.1627.

The dollar index fell by 0.31%, to 98.43, measuring the greenback in relation to a basket including the yen, the euro and other currencies.

Brent oil futures gained 0.92% at $68.26, while U.S. crude oil rose 0.94% to $75.77.

The spot gold price fell by 0.14%, to $3376.08 per ounce.

(source: Reuters)