Global markets mixed as softer US inflation offsets geopolitical concerns

Global markets traded mixed on Thursday as softer-than-expected US inflation data supported risk appetite, while geopolitical tensions and sharp losses in Asian technology stocks limited gains.

US consumer and producer inflation both came in below expectations, reinforcing expectations that the Federal Reserve could delay a potential interest rate hike.

Investor sentiment remained cautious, however, after US Central Command announced a second wave of strikes targeting Iranian military capabilities, it said were used to threaten shipping through the Strait of Hormuz.

Iran's Islamic Revolutionary Guard Corps said its retaliatory operations were aimed at destroying US infrastructure in the region.

Fed Chair Kevin Warsh said investments in artificial intelligence could create short-term price pressures but may not prove inflationary over the longer term. He welcomed the latest inflation data but said current indicators remain imperfect measures of underlying price pressures.

New York Fed President John Williams said inflation appeared to have peaked and should gradually ease, while Fed Governor Lisa Cook said she was prepared to act if disinflation stalled.

The Fed's Beige Book showed economic activity expanded at a mild to moderate pace across most US regions.

The International Monetary Fund said weaker demand, higher production and inventory drawdowns had prevented a sharper rise in oil prices following the Middle East conflict, though it warned most of those buffers had now been exhausted.

The benchmark US 10-year Treasury yield was little changed at 4.56%, while Brent crude fell 1.3% to $83.70 a barrel. The US Dollar Index edged up 0.1% to 100.5, and gold slipped 0.7% to $4,031 an ounce.

Wall Street closed higher on Wednesday, supported by softer inflation data and strong corporate earnings.

Morgan Stanley reported second-quarter net income of $5.6 billion, up 58% from a year earlier, while revenue rose 27% to $21.3 billion. Its shares gained 0.4%.

BlackRock climbed 6.6% after posting stronger-than-expected results, while PayPal surged 17.2% following reports that Stripe and Advent International had submitted a joint takeover bid.

The Dow Jones Industrial Average rose 0.29%, the S&P 500 gained 0.38% and the Nasdaq Composite advanced 0.62%.

European markets were mixed as concerns over the Middle East conflict offset weaker eurozone industrial production data, which showed output fell 0.2% month over month and 1.2% year over year in May.

France's CAC 40 rose 0.19%, while Britain's FTSE 100 slipped 0.13%, Germany's DAX fell 0.59% and Italy's FTSE MIB lost 0.85%.

Asian markets came under heavy selling pressure, led by technology stocks.

SK Hynix fell 12% and Samsung Electronics dropped 8.6%, despite Taiwan Semiconductor Manufacturing Co. reporting second-quarter net profit of $21.9 billion, above market expectations of $19.3 billion.

The Bank of Korea raised its benchmark interest rate by 25 basis points to 2.75%, its first increase in three and a half years, citing persistent inflation and the need to support the won.

Japan's Nikkei 225 fell 2.6%, South Korea's Kospi dropped 6.8% and China's Shanghai Composite lost 0.8%, while Hong Kong's Hang Seng Index rose 1.9%.