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Global Stocks Edge Up Amid Questions on Fed Policy

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06/13/2019 | 04:52am EDT

By Will Horner

Global stocks mostly crept higher Thursday as investors weighed the chances of a U.S. interest-rate cut after data showed the nation's inflation was weaker than expected.

The Stoxx Europe 600 rose 0.2% in the opening minutes of trading. A jump in the price of oil was helping to support shares of European oil companies. The Stoxx Europe 600's oil & gas subindex rose 0.7%.

Crude's gains came after a U.K. maritime safety group warned of an unspecified incident in the Gulf of Oman. Tensions between Iran and the U.S. ran high following an attack on four tankers nearby last month. The region's waters are crucial for the transportation of oil, and fears that tensions would crimp supply helped Brent crude oil to jump 3.1% to $62.64 a barrel.

In Asia, stocks in Shanghai and Shenzhen posted modest advances, but Hong Kong's Hang Seng slipped 0.1% as protests in the city against unpopular legislation turned violent. Japan's Nikkei fell 0.5%.

In the U.S., futures pointed to opening gains on Wall Street of 0.2% for the S&P 500 and 0.1% for the Dow Jones Industrial Average.

Stocks across the globe began the week higher as investors welcomed hints from the U.S. Federal Reserve that it might lower interest rates. Those hopes have been tempered in recent sessions by continuing concerns over the Trump administration's willingness to levy tariffs on U.S. trading partners, and questions over whether U.S. economic data would prove weak enough for the nation's central bank to act.

Data released Wednesday showed U.S. inflation slowed last month. Annual consumer prices rose 1.8% in May, lower than the 2% in April and below a WSJ consensus forecast of 1.9%. While the reading spurred the case for a rate cut, investors were debating whether pressure on the Fed from markets and the Trump administration would be sufficient to prompt the central bank to move.

"The market is clearly telling the Fed...that policy is too tight for an economy that is running with low inflation," said Katie Nixon, Chief Investment Officer at Northern Trust's wealth management business. "The only question right now is will the Fed listen?"

Ms. Nixon said the central bank was in difficult position, as it seeks to avoid appearing to bow to pressure from Mr. Trump, who has repeatedly chastised it for raising interest rates. A meeting of the central bank's policy-making body next week might provide an opportunity for it to acknowledge the inflation data and offer more hints of a coming cut.

U.S. government bond prices rose slightly. That pushed down the yield on the 10-year U.S. Treasury note to 2.111% after settling at 2.129% Wednesday. The U.S. Dollar Index, which tracks the currency against a basket of its peers, fell 0.1%.

Write to Will Horner at william.horner@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
DJ INDUSTRIAL 0.10% 26843.04 Delayed Quote.14.96%
HANG SENG 0.87% 26520.49 Real-time Quote.1.72%
NASDAQ 100 0.19% 7859.124827 Delayed Quote.22.28%
NASDAQ COMP. 0.08% 8063.354134 Delayed Quote.19.83%
NIKKEI 225 1.15% 21798.87 Real-time Quote.7.68%
S&P 500 0.02% 2970.75 Delayed Quote.18.49%
US DOLLAR INDEX 0.18% 98.48 End-of-day quote.1.86%
WTI -2.46% 53.52 Delayed Quote.14.98%
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