European Stock Futures Rise Ahead of Key US Data: Markets Wrap

European Stock Futures Rise Ahead of Key US Data: Markets Wrap

(Bloomberg) — Global stocks are poised for a new record high after a big tech-led rally in U.S. indicators, as investors await key inflation data for clues on Reserve policy federal.

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Futures on European and U.S. stocks advanced, while the MSCI All Country World Index extended its longest run since January. Ahead of U.S. Consumer Price Index data, the S&P 500 shrugged off signals from Jerome Powell that interest rates would stay higher for longer and a mixed reading of the producer inflation.

“Market sentiment depends on tonight’s US CPI report,” said Kyle Rodda, senior market analyst at Capital.com in Melbourne. “While promising, if it were to occur and represent a more than three-year low for underlying CPI, a larger downside surprise would be needed to allay fears of persistent and re-anchored inflation.”

A benchmark indicator in Asia rose after closing at a two-year high on Tuesday, with Taiwan Semiconductor Manufacturing Co. leading the advance. Japan’s stocks ended little changed, while those in mainland China fell. Hong Kong markets are closed for a public holiday.

The offshore yuan rose slightly, reflecting gains in other currencies sensitive to the Chinese economy, including the Australian dollar and the Thai baht, following a Bloomberg report that the government was considering a proposal to buy millions of unsold homes in an attempt to save the beleaguered real estate market.

The American Depositary Receipts of Tencent Holdings Ltd. surged after the company’s revenue topped estimates in results released Tuesday evening, while Alibaba Group Holding Ltd.’s earnings. fell, highlighting the growing divergence between China’s two internet powerhouses. Elsewhere, shares of Hon Hai Precision Industry Co. fell after reporting weaker-than-expected profit as iPhone demand remained sluggish in China.

In the corporate world, shares of Sony Group Corp. climbed as investors rewarded its mid-term plan and shareholder return policy after the company announced its quarterly results.

Upper estimates

The Bloomberg Dollar Index held steady as 10-year U.S. Treasury yields were little changed on Wednesday after falling five basis points to 4.44% in the previous session, as traders braced for a sharp drop in yields following the publication of the IPP.

U.S. producer prices rose more than expected in April, although the key elements that drive the Fed’s preferred inflation gauge were more muted. Several categories of the PPI report used to calculate the personal consumption expenditure price index have been relaxed.

“A more granular look suggests that the components driving PCE inflation have sent mixed signals,” said Krishna Guha at Evercore. “This means the burden is largely on the CPI.”

US core CPI likely moderated in April for the first time in six months, raising hopes that price pressures will begin to ease again. Compared to April 2023, the core CPI is expected to increase by 3.6%. Even though the annual increase would be the lowest in three years, it would still be too high to justify a rate cut.

“Investors expect inflation to decline in April,” said Anthony Saglimbene at Ameriprise. “Even though the decline is slight, markets are looking for additional evidence that the downward trend in inflation remains intact and, importantly, is not reversing the upward trend.”

A survey by 22V Research showed that 49% of investors expect the market reaction to the CPI report to be “risk-on”, while only 27% say they are “risk-free”.

In the commodities sector, oil rose Wednesday after an industry report showed a decline in U.S. inventories, and traders looked forward to a report from the International Energy Agency that will highlight market balances in the second half. Gold stabilized after rising almost 1% on Tuesday.

Key events this week:

  • Eurozone industrial production, GDP, Wednesday

  • US CPI, retail sales, business stocks, manufacturing empire, Wednesday

  • Minneapolis Fed President Neel Kashkari speaks Wednesday

  • Japan GDP, industrial production, Thursday

  • U.S. Housing Starts, Initial Jobless Claims, Industrial Production, Thursday

  • Philadelphia Fed President Patrick Harker speaks Thursday

  • Cleveland Fed President Loretta Mester speaks Thursday

  • Atlanta Fed President Raphael Bostic speaks Thursday

  • China real estate prices, retail sales, industrial production, Friday

  • Eurozone CPI, Friday

  • Conf. Board Leading Index, Friday

Some of the main market movements:

Actions

  • S&P 500 futures were little changed as of 6:54 a.m. London time.

  • Hang Seng futures little changed

  • The Japanese Topix rose 0.1%

  • Australia’s S&P/ASX 200 rose 0.4%

  • The Shanghai Composite fell 0.5%

  • Euro Stoxx 50 futures rose 0.2%

  • Nasdaq 100 futures little changed

  • Australia’s S&P/ASX 200 rose 0.4%

Currencies

  • Bloomberg Dollar Spot Index little changed

  • The euro was little changed at $1.0825

  • The Japanese yen was little changed at 156.33 per dollar.

  • The offshore yuan rose 0.2% to 7.2256 per dollar.

  • The Australian dollar rose 0.2% to $0.6643.

  • Sterling was little changed at $1.2595.

Cryptocurrencies

  • Bitcoin rose 0.5% to $61,882.38

  • Ether rose 0.5% to $2,904.42

Obligations

  • The yield on 10-year Treasury bills changed little at 4.44%

  • The Japanese 10-year yield was little changed at 0.955%

  • The Australian 10-year yield was little changed at 4.32%

Raw materials

This story was produced with the help of Bloomberg Automation.

–With the help of Abhishek Vishnoi.

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