Global Markets Await US Inflation Data with Optimism
Global stocks and bonds saw a slight uptick ahead of the release of crucial US inflation data, as investors speculated that the report would show a slowdown in price pressures, cementing the belief that interest rates have peaked.
The Stoxx Europe 600 index added 0.2%, driven by the performance of mining stocks, with Glencore Plc leading the pack with a 4% gain after agreeing to buy a majority stake in Teck Resources Ltd.’s coal business for almost $7 billion. However, Vodafone Group Plc shares fell 1.7% due to weaker profits in southern Europe.
Equity futures also rose, with contracts on Nasdaq 100 advancing 0.3%. Treasury yields slipped two basis points to 4.61%, while West Texas Intermediate futures climbed.
Market analysts are predicting that US inflation likely eased to an annual rate of 3.3% in October, down from 3.7% in September, according to a Bloomberg survey of economists. However, core inflation, which strips out energy and food costs, is expected to remain unchanged, indicating slow progress towards the Federal Reserve’s 2% inflation target.
Michael Preiss, a portfolio manager at Das Family Office Pte Ltd., expects the figures to confirm sticky inflation but added that “signaling from the Fed increasingly leads us to the belief that we are at the end of the tightening cycle.”
Key figures from the Fed including Vice Chair Philip Jefferson and Chicago Fed President Austan Goolsbee are scheduled to speak, alongside a slate of earnings reports from companies including Home Depot Inc.
Traders are also watching to see how the US inflation data impacts the yen, with analysts warning that a stronger-than-expected print may push the Japanese currency to a 33-year low and potentially trigger intervention by the central bank.
Elsewhere in currency markets, the pound rose 0.2% in response to data showing UK labor markets are holding up well.
Early indications from Asia showed positive momentum, with MSCI’s Asia Pacific equity index advancing 0.3%. Chinese President Xi Jinping and his US counterpart Joe Biden are due to meet on Wednesday on the sidelines of the Asia-Pacific Economic Cooperation summit in San Francisco.
The coming days will see a flurry of key events, including US retail sales data, UK CPI figures, and earnings reports from major companies like Walmart. Additionally, US President Joe Biden and Chinese President Xi Jinping are expected to speak at the APEC leaders summit on Thursday.
Market moves so far show slight gains in equities and currencies, with some fluctuation in commodity and bond markets. Most notably, the yield on 10-year Treasuries declined two basis points to 4.62%.
This story was created with the help of Bloomberg Automation.