Stocks rise amid US inflation report: market results

(Bloomberg) — Stocks in Europe and Asia rose as traders bet that US inflation is declining, easing pressure from the Federal Reserve to raise interest rates aggressively.

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Mining and energy companies pushed up benchmark European equities amid optimism over demand from China as its economy reopens. On Wall Street, Nasdaq 100 contracts held steady after the tech sector, one of the hardest-hit groups during the Fed’s tightening campaign, led US stocks higher on Wednesday. The same as for the S&P 500, little changed.

Treasuries crept higher, underpinning gains in the US session, while the dollar strength indicator remained virtually unchanged as investors ignored hawkish comments from Federal Reserve officials.

Every aspect of the CPI report, due later Thursday, will be scrutinized, with particular attention to core inflation, which excludes food and energy and is seen as a better indicator than the main indicator. The projected 5.7% hike would be well above the Fed’s target, which would help explain its intention to keep rates high for longer. But year-on-year price increases will also show moderation.

“Given recent developments in the oil markets and a slowdown in food prices, investors will be turning to key indicators to better understand underlying price pressures, which could remain fairly robust,” said Johannesburg-based economists at Rand Merchant Bank. .

In Asia, the region’s stock index rose for the ninth time in 10 days, reaching its highest level in about five months. The yen rose on the news that the Bank of Japan will study the side effects of its ultra-loose monetary policy. Japanese government bond futures fell to their lowest level since 2014, and the yield on the country’s benchmark 10-year debt was hit hard by the 0.5% ceiling set by the Bank of Japan.

China inflation data showed factory prices fell more than expected in December and consumer prices rose as the end of Covid Zero slowed down manufacturing operations but removed restrictions on people’s mobility. The offshore yuan fluctuated, remaining close to Wednesday’s close.

Despite the fact that Chinese assets have been the most profitable in the world in recent months, many large foreign investors are wary of trusting the government given the 2022 regulatory shocks.

Read: China trauma proves US funds don’t trust Xi yet

In other markets, oil stabilized after five days of gains ahead of US inflation data and also due to increased purchases of crude oil in China ahead of the Lunar New Year holidays.

Gold rose ahead of data that could determine whether its two-month uptrend continues.

Key events of this week:

  • US CPI, Initial Jobless Claims, Thursday

  • Louis Fed President James Bullard at a Wisconsin Bankers Association virtual event Thursday

  • Richmond Fed President Thomas Barkin speaks in the VBA/VA chamber on Thursday

  • Trade in China, Friday

  • University of Michigan Consumer Sentiment, Friday

  • Citigroup, JPMorgan and Wells Fargo report earnings, Friday

This week’s MLIVE Pulse Poll:

Some of the major movements in the markets are:

Stock

  • The Stoxx Europe 600 was up 0.5% as of 8:27 am London time.

  • S&P 500 futures remain virtually unchanged

  • Nasdaq 100 futures remain virtually unchanged

  • Futures for the Dow Jones Industrial Average remained virtually unchanged

  • The MSCI Asia Pacific Index rose 0.4%.

  • The MSCI Emerging Markets Index was almost unchanged.

Currencies

  • Bloomberg Spot Dollar Index Little Changed

  • The euro changed slightly at $1.0752.

  • The Japanese yen rose 0.5% to 131.75 per dollar.

  • The offshore yuan was little changed at 6.7646 per dollar.

  • The British pound was almost unchanged at $1.2139.

Cryptocurrencies

  • Bitcoin rose 3.2% to $18,117.98.

  • Ether is up 4% to $1,396.28.

Bonds

  • The 10-year Treasury yield fell three basis points to 3.51%.

  • The yield on German 10-year bonds fell six basis points to 2.15%.

  • The yield on British 10-year bonds fell six basis points to 3.35%.

Goods

  • Brent crude rose 0.1% to $82.76 per barrel.

  • Spot gold rose 0.4% to $1,882.47 an ounce.

This story was produced with the assistance of Bloomberg Automation.

— With assistance from Tassia Sipahutar and Yukyung Lee.

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