Oil Prices Lifted by Supply Drop and Demand Rebound
Global oil prices edged higher on Thursday, supported by tightening U.S. inventories and renewed optimism around global fuel demand. Brent crude rose to $68.76 per barrel, while WTI advanced to $66.71, marking a continuation of this month’s upward trend.
A key factor driving the rise was a 3.9 million barrel decline in U.S. oil stockpiles, as reported by the Energy Information Administration (EIA). This points to stronger refinery activity and transportation demand both of which are recovering post-monsoon disruptions in Asia and hurricane risks in North America.
Additionally, signs of easing trade frictions involving the U.S. and key markets like India, Vietnam, and the EU have further improved sentiment among energy investors.
Powell Replacement Rumors Stir Market Nerves
Markets were briefly rattled after U.S. President Donald Trump revealed he had once considered removing Federal Reserve Chairman Jerome Powell from office. Although the president clarified that no action was being taken, the remark caused a brief spike in market volatility.
Despite the shock, U.S. equity benchmarks managed to recover:
- The Nasdaq Composite hovered near an all-time high.
- The S&P 500 gained modest ground.
- The Dow Jones ended with marginal gains.
This incident has reignited a longstanding debate about central bank independence and its role in safeguarding long-term economic stability.
Technology Stocks Soar as TSMC Exceeds Forecasts
The global technology sector received a boost after Taiwan Semiconductor Manufacturing Co. (TSMC) posted stronger-than-expected earnings for Q2. The company also announced an increase in capital investment plans to meet rising chip demand, particularly in artificial intelligence and automotive sectors.
The ripple effect was seen in rising shares of Nvidia, Intel, and AMD. Meanwhile, ASML, a key supplier of chip-making equipment, issued a more measured forecast due to production delays.
Asian Markets: Winners and Laggards
Asian stock markets showed a mixed performance:
- Japan’s Nikkei 225 rose 0.6%, driven by gains in tech and industrials.
- Australia’s ASX 200 advanced 0.9% amid rising iron ore and banking stocks.
- South Korea’s Kospi added 0.2%, extending its recent recovery.
- Thailand’s SET Index jumped nearly 3% on stronger-than-expected GDP data.
- China’s Shanghai Composite remained flat due to persistent housing market uncertainties.
India’s Sensex and Nifty Retreat on Global Headwinds
In India, benchmark indices Sensex and Nifty 50 ended in the red. The Nifty fell below the 25,200 mark as investors digested Powell-related global news, along with mixed Q1 earnings results from Indian corporates.
Investor mood was further dampened by speculation over the Reserve Bank of India’s (RBI) next monetary policy move amid sticky inflation and uneven economic growth. FIIs remained cautious, with limited inflows into Indian equities.
Currency Markets React to Powell Statement
The U.S. Dollar Index showed volatility following the Powell controversy but stabilized by the end of the session. Currency markets are now bracing for fresh economic data and signals from central banks worldwide.
Several central banks, including those in Europe, the UK, and Asia-Pacific, are treading carefully as inflation remains above ideal levels. Rate-cut expectations have been scaled back, with most policymakers now favoring a “wait and assess” approach.
A Bank of America global fund manager survey revealed that cash holdings among institutional investors have dropped to 3.9%, the lowest in over a decade suggesting a potentially overbought market.
What’s Next: Data and Earnings in Focus
Investors are now awaiting key U.S. macroeconomic data including retail sales and weekly jobless claims which could shape expectations around future Fed rate decisions.
Additionally, upcoming quarterly earnings from Netflix, Tesla, and leading financial institutions are expected to influence near-term equity trends.
Conclusion: Optimism With a Side of Caution
While energy markets remain strong and tech stocks are enjoying positive momentum, investor confidence is tempered by political developments and monetary uncertainty. Central banks across the globe are walking a fine line, balancing growth with inflation management.
