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Global Stocks Resilient, Oil Near Highs as Investors Stay Positive Despite Mixed Data

Global stocks showed resilience on Tuesday as investors remained optimistic about the prospects of the global economy, despite signs of risks revealed by recent data. European stocks experienced a slight setback, falling 0.2% after a 2% gain in July, marking their second consecutive month of gains.

However, UK stocks edged up 0.1%, with HSBC gaining 2.6% after announcing a $2 billion share buyback and raising its key profitability target.

Investors are preparing for an end to the series of U.S. Federal Reserve interest rate hikes, with last week’s increase widely seen as one of the last in the current tightening cycle. Market sentiment has been positive since the Fed’s rally, and Wall Street futures indexes were set to open flat. The MSCI world equity index, tracking shares in 47 countries, fell 0.1% after registering a 3.5% gain last month.

Due to indications of tightening global supply and producers cutting output, oil prices have remained close to a three-month high. Brent crude futures were last down 0.6% at $85.25 during London trading. Energy giant BP gained 0.2% and increased its dividend by 10% after reporting a second-quarter profit of $2.6 billion.

The dollar hit a three-week high against the yen as investors sought clarity on the Bank of Japan’s recent adjustment to its yield curve control and its implications for monetary policy. Meanwhile, MSCI’s broadest index of Asia-Pacific shares inched back toward Monday’s high, the strongest since April last year.

While signs of peaking inflation in Europe echoed the narrative in the United States, caution prevailed over the prospects for the global economy due to China’s post-pandemic recovery remaining sluggish, with manufacturing contracting in a private-sector survey released Tuesday.

The positive U.S. narrative will face crucial tests this week with several closely watched job reports, culminating with monthly payrolls on Friday. The Australian dollar experienced its sharpest one-day drop in a month, falling 1% to $0.6652 after the Reserve Bank of Australia maintained interest rates for a second consecutive month.

The U.S. dollar index, measuring the currency against six major peers, rose to 102.07, its highest since July 10, partly due to the yen’s continued retreat to a three-week low of 142.84 per dollar.

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