Overall sentiment on stock markets is positive after better-than-expected inflation data in the United States

New York (AFP) - Global stocks finished mixed on Thursday as investors weighed whether a second straight upbeat US inflation report could speed a pivot in Federal Reserve policy away from aggressive tightening.

The US producer price index (PPI) rose by 9.8 percent year-on-year in July, the Labor Department calculated, down from 11.3 percent in June. And on a monthly basis, the index actually fell for the first time in over a year.

Coming after better-than-expected consumer price data the day before, the PPI numbers cheered investors as they suggested that the Fed could begin taking its foot off the pedal somewhat when it comes to raising interest rates to dampen inflation, traders said.

Wall Street initially jumped on the news, while European markets, which had been in the red earlier in the session, were mostly able to end the day in positive territory.

But the US rally petered out as the session progressed.

Briefing.com analyst Patrick O’Hare noted the weakening in stocks came as the yield on the 10-year US Treasury note pushed higher, reflecting expectations that the Fed will continue to hike interest rates.

In the end, while the Dow eked out a 0.1 percent gain, the S&P 500 edged lower and the Nasdaq shed 0.6 percent.

“The reality does settle in,” O’Hare told AFP. “While the headlines were uplifting, inflation is still very high.”

Leading Fed officials have continued to speak of the urgent need to address inflation, setting the stage for another potentially large rate hike in September.

“Investors are certainly in a more upbeat mood as the relief from the US inflation data ripples through the markets,” said OANDA analyst Craig Erlam.

However, “Fed policymakers remain keen to stress that the tightening cycle is far from done and a policy U-turn early next year is highly unlikely,” Erlam said.

- Half-point rise?-

After the Fed already raised interest rates by three-quarters of a percentage point twice this year, the financial markets fear that a further hike of the same magnitude could choke off economic recovery.

“Though the probability of another 75-basis-point hike in September has fallen sharply, the debate about a hike of 50 or 75 basis points will continue, and the Fed will be keen to keep that debate going, until we get the next consumer price inflation and employment reports,” said Forex.com analyst Fawad Razaqzada.

Investors will therefore be listening out for more comments from policymakers over the next weeks to better gauge the likely pace of further rate hikes, traders said.

On the oil market, crude prices climbed as US recession fears eased – but remained around six-month lows and below the levels seen before the Ukraine war.

Among individual stocks, Disney gained 4.7 percent after reporting better-than-expected quarterly earnings, as well as a leap in paying subscribers for its streaming service.

- Key figures at around 2030 GMT -

New York - Dow: UP 0.1 percent at 33,336.67 (close)

New York - S&P 500: DOWN 0.1 percent at 4,207.27 (close)

New York - Nasdaq: DOWN 0.6 percent at 12,779.91 (close)

London - FTSE 100: DOWN 0.6 percent at 7,465.91 (close)

Frankfurt - DAX: DOWN 0.1 percent at 13,694.51 (close)

Paris - CAC 40: UP 0.3 percent at 6,544.67 (close)

EURO STOXX 50: UP 0.2 percent at 3,757.05 (close)

Hong Kong - Hang Seng Index: UP 2.4 percent at 20,082.43 (close)

Shanghai - Composite: UP 1.6 percent at 3,281.67 (close)

Tokyo - Nikkei 225: Closed for a holiday

Euro/dollar: UP at $1.0326 from $1.0299 Wednesday

Pound/dollar: DOWN at $1.2196 from $1.2219

Euro/pound: UP at 84.65 pence from 84.29 pence

Dollar/yen: UP at 133.05 yen from 132.89 yen

Brent North Sea crude: UP 2.3 percent at $99.60 per barrel

West Texas Intermediate: UP 2.6 percent at $94.34 per barrel