Wall Street equity futures and European stocks climbed as traders prepared for US inflation data Thursday that may show further softening, bolstering the case for less-aggressive interest-rate hikes.
(Bloomberg) — Wall Street equity futures and European stocks climbed as traders prepared for US inflation data Thursday that may show further softening, bolstering the case for less-aggressive interest-rate hikes.
S&P 500 and Nasdaq 100 contracts both rose by about 0.3%. Airline stocks recovered from declines in premarket trading after the failure of a key pilot notification system operated by the Federal Aviation Administration disrupted morning air travel. In Europe, real-estate stocks led gains in the Stoxx 600 Index amid subsiding inflation worries. Miners were boosted by optimism China’s economic reopening will spur demand for metals.
Treasury yields trimmed their advance from the previous session, with the rate on 10-year debt slipping to just below 3.6% as investors remained focused on the price outlook for the US. A gauge of dollar strength held within sight of a seven-month low.
Federal Reserve Chair Jerome Powell in remarks Tuesday refrained from commenting on the outlook for monetary policy before the December consumer price index figures. Signs of cooling could support a move toward slower rate increases, even as some officials say it’s too early to declare victory over inflation.
“The prospect of a less cloudy economic outlook in both Europe and the US after recession risks in both regions eased back, combined with the reopening of the Chinese economy, is providing strong support toward risk appetite from investors,” said Pierre Veyret, a technical analyst at ActivTrades. “The lack of clear hints from Fed Chairman Jerome Powell yesterday also contributed to keeping the bullish trading stance alive, and most traders will now look toward tomorrow’s US inflation print for further clues.”
While Powell didn’t directly comment on the Fed’s next steps at a forum in Stockholm, he did say that “restoring price stability when inflation is high can require measures that are not popular in the short term as we raise rates to slow the economy.”
Fed Governor Michelle Bowman said the central bank has more work to do to curb inflation, noting that further tightening is needed.
On Tuesday, the S&P 500 finished above its key 3,900 mark, which is seen by several technical analysts as a resistance level that could help define a more solid trend.
“I think we’re back in a bull market — not straight up, a lot of volatility — but I think the markets are telling us that the real economy is improving,” Ed Yardeni, president and founder of Yardeni Research Inc., said on Bloomberg Television.
Optimism over demand from China was evident in the iron ore market, with the steel-making ingredient rallying above $120 a ton in Singapore. Copper rose above $9,000 a ton for the first time since June, fueled by hopes of increased consumption by the world’s top user of the metal.
Elsewhere in markets, oil reversed an earlier decline as traders weighed the outlook for stronger Chinese demand against a reported build in US crude stockpiles.
Key events this week:
- ECB Governing Council members speak at Euromoney conference in Vienna, Wednesday
- US CPI, initial jobless claims, Thursday
- St Louis Fed President James Bullard at Wisconsin Bankers Association virtual event, Thursday
- Richmond Fed President Thomas Barkin speaks at VBA/VA Chamber, Thursday
- China trade, Friday
- US University of Michigan consumer sentiment, Friday
- Citigroup, JPMorgan, Wells Fargo report earnings, Friday
This week’s MLIVE Pulse Survey:
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.4% as of 8:26 a.m. New York time
- Nasdaq 100 futures rose 0.4%
- Futures on the Dow Jones Industrial Average rose 0.3%
- The Stoxx Europe 600 rose 0.6%
- The MSCI World index rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.1% to $1.0749
- The British pound fell 0.3% to $1.2116
- The Japanese yen fell 0.3% to 132.70 per dollar
Cryptocurrencies
- Bitcoin fell 0.2% to $17,426.37
- Ether fell 0.4% to $1,334.37
Bonds
- The yield on 10-year Treasuries declined five basis points to 3.57%
- Germany’s 10-year yield declined six basis points to 2.24%
- Britain’s 10-year yield declined 14 basis points to 3.41%
Commodities
- West Texas Intermediate crude rose 1.4% to $76.15 a barrel
- Gold futures rose 0.3% to $1,882.50 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Michael Msika and Brett Miller.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.