Volkswacht Bodensee - Stocks rebound, oil wobbles as traders weigh Iran, rates outlook

The European Central Bank, as widely expected, raised interest rates for the first time since 2023 after the Iran war sent oil and gas prices soaring as the Strait of Hormuz was cut off to Gulf tanker traffic.

"The rate hike should be seen as an insurance move to reinforce the ECB's inflation fighting credibility, not as the beginning of an aggressive tightening cycle," said Stefan Gerlach, chief economist at EFG Bank in Zurich and a former deputy governor of Ireland's central bank.

The increase made the ECB the first of the world's major central banks to lift borrowing costs in response to the energy shock unleashed by the US-Israeli war against Iran.

A series of fresh strikes between the United States and Iran has kept sentiment on edge this week, despite a ceasefire agreed to in April.

Oil prices fell back after US Central Command said it had completed the latest strikes against Iran, but then turned higher as US President Donald Trump vowed fresh strikes and to seize the country's key oil infrastructure.

The US military will hit Iran "VERY HARD TONIGHT", Trump said in a Truth Social post.

"At some point in the not too distant future, we will be taking Kharg Island, and other oil infrastructure points, and assume total control of their Oil and Gas Markets, much like we have with Venezuela," he added.

In Asian stocks trading, Tokyo edged higher while Hong Kong and Shanghai declined.

That followed a weak session on Wall Street on Wednesday, where tech stocks again led declines after data showed a jump in US consumer inflation to a three-year high.

Wall Street's main indices rebounded Thursday despite data showing that US wholesale prices rose sharply in May, registering their highest 12-month increase in more than three years at 6.5 percent.

Month-on-month prices rose by 1.1 percent, which was higher than market expectations.

"The key takeaway from the report is that producers aren't finding much price relief," said Briefing.com analyst Patrick O'Hare.

"Hence, consumers won't find much price relief in the near-term either, unless producers choose to absorb the higher costs," he added.

Investors are increasingly turning their attention to the Federal Reserve's policy meeting next week, with observers now suggesting a US rate increase could come before the end of the year.

Investors are also gearing up for the stock market debut of Elon Musk's SpaceX, expected to be the biggest in history when shares start trading on Friday.

"Given there's so much money riding on this... it could also influence broader market sentiment," said Susannah Streeter, chief investment strategist at Wealth Club.

"A stronger, more durable debut may boost confidence in high-growth technology companies," she said. "But a disappointing start could spark off another spurt of profit-taking across the sector" after huge gains since early this year.

- Key figures at around 1530 GMT -

New York - Dow: UP 0.6 percent at 50,195.89 points

New York - S&P 500: UP 0.2 percent at 7,281.40

New York - Nasdaq Composite: UP 0.3 percent at 25,247.14

London - FTSE 100: UP 0.5 percent at 10,303.88 (close)

Paris - CAC 40: UP 0.5 percent at 8,200.80 (close)

Frankfurt - DAX: UP less than 0.1 percent at 24,209.71 (close)

Tokyo - Nikkei 225: UP 0.1 percent at 64,217.27 (close)

Hong Kong - Hang Seng Index: DOWN 0.7 percent at 24,249.29 (close)

Shanghai - Composite: DOWN 0.2 percent at 3,987.01 (close)

Brent North Sea Crude: DOWN 0.2 percent at $92.89 a barrel

West Texas Intermediate: UP 0.4 percent at $90.38 a barrel

Euro/dollar: DOWN at $1.1524 from $1.1545 on Wednesday

Pound/dollar: DOWN at $1.3339 from $1.3376

Dollar/yen: DOWN at 160.49 yen from 160.52 yen

Euro/pound: UP at 86.37 pence from 86.31 pence

K.Hofmann--VB