Stocks stabilise after chip selloff; US inflation data up next

By Amanda Cooper

LONDON, Oct 14 (Reuters) - Global stocks rose on Wednesday, helped by a steadying in AI-related shares and government bonds, as investors kept volatility to a minimum ahead of US inflation data later in the day.

Tech shares in Europe were among the top performers of the day, taking their lead from a recovery overnight in Asia, where Samsung Electronics and SK Hynix both closed up, and from an upbeat outlook from Dutch chip equipment maker ASML, whose shares rose 1.4%.

Europe's STOXX 600 was up 0.5%, while the MSCI All-World index edged up 0.1%.

Sentiment remained cautious, however, as oil prices rose following attacks on two vessels in the Strait of Hormuz and after Iranian officials told Reuters they were deploying new tactics to target ships, raising the risk of fresh disruption to energy supplies.

Brent crude futures, which are around their highest in nearly two weeks, were last up over 0.5% on the day at $106.4 a barrel. 

"Geopolitics and AI remain the main drivers of the market. There seems to be little progress on the geopolitical front, with a deal looking less likely before the midterms. We have been in the optimistic camp, but have to admit that chances of even a fudge look low," Jefferies strategist Mohit Kumar said.

Government bonds also witnessed some respite after a few weeks of almost non-stop selloffs, in the face of high energy prices and rising expectations for global interest rates to keep edging up.

The yield on benchmark 10-year Treasury notes dipped 1 basis point to 5.21%, nearing its lowest in two weeks, while 30-year yields were steady at 5.56%, following three days of declines.

Another round of earnings is due from the big banks, starting with Bank of America on Wednesday, which saw profits fall in the third quarter. US bank stocks lost ground on Tuesday after mixed quarterly earnings results from Citigroup and several competitors, which weighed on the broader market.

S&P 500 futures were up 0.1%, while those for the Nasdaq were down 0.2%.

CPI TEST AWAITED

Investors were awaiting the release on Wednesday of the US consumer price index for September, which is expected to have picked up, given the strength of energy and other commodity costs last month.

Economists estimated headline inflation accelerated to an annual 3.6% in September due to rebounding energy prices, with the core CPI rising 0.2% on a monthly basis. 

Right now, money markets show traders are attaching a roughly 20% chance of a hike from the Federal Reserve late this month and a near-100% chance of a rise in December. Wednesday's inflation data could help refine those odds.

New York Federal Reserve President John Williams said the Fed may need to raise its policy rate once more this year to slow inflation, but that he saw no need for hikes in 2027. 

"With several FOMC members indicating that a pause is likely this month amidst a moderation in job creation, we doubt that inflation numbers would be sufficiently hot to change the odds of hiking materially," Eugene Leow, senior rates strategist at DBS, said in a note. 

The dollar index, which tracks the US currency against six others, was up 0.1% at 102.26, close to its highest since April 2025. The euro was down modestly at $1.118, while the pound was steady at $1.326.

Meanwhile, in China, data on Wednesday showed producer prices rose at their fastest pace in more than four years while consumer inflation edged up last month, although weak domestic demand kept the increase in broader price pressures contained.

(Additional reporting by Jiaxing Li in Hong Kong; Editing by Christopher Cushing, Louise Heavens and Toby Chopra)