US futures, stocks rise ahead of key inflation data: Markets wrap

(Bloomberg) — Wall Street stock futures edged higher and European stocks advanced as investors braced for the release of U.S. inflation figures later Tuesday, which will help assess the Federal Reserve’s stance on the pace of further rate hikes will be crucial.

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Contracts for the S&P 500 rose 0.2% and those for the tech-heavy Nasdaq 100 rose 0.3%. Palantir Technologies Inc. rallied in premarket trading after the data analytics firm said it expects 2023 to be its first profitable year ever. Avis Budget Group Inc. rose after the car rental company’s earnings beat analysts’ estimates.

Gains in European telecom and travel & leisure stocks helped push the Stoxx 600 index higher. Shares in Vodafone Group Plc rose after Liberty Global Plc announced it had bought a stake in rival British telecoms group. TUI AG rose after the world’s largest tour operator said summer bookings are ahead of pre-pandemic levels.

US inflation is likely to have accelerated to 0.5% in January from 0.1% in December while decelerating to 6.2% year-on-year from 6.5%, according to Bloomberg estimates. After a nearly 8% rally in the S&P 500 this year, Tuesday’s print will show whether investors’ optimism about an easing of Fed rate hikes is warranted, with a hotter-than-expected number likely to weigh on markets.

“The Fed is as uncertain as we are about the inflation outcome,” said Adam Cole, head of currency strategy at RBC Europe in London. That means the focus on “the incremental news each month on the CPI is incredibly high,” he said.

The yen rose following the formal appointment of Kazuo Ueda as the next Bank of Japan governor. Traders have recently increased their bets that the Ueda-led BOJ’s yield curve control and negative interest rate policy could soon be scrapped.

The story goes on

A sign of greenback strength slipped while US 10-year Treasury yields were little changed. The pound rose after figures showed UK wages had risen faster-than-expected at the end of 2022, increasing pressure on the Bank of England to deliver another rate hike next month.

Meanwhile, the latest global fund manager survey by Bank of America Corp. pointed out that while stock markets are on an unrelenting march amid optimism about stronger economic growth and slowing inflation, most investors are unconvinced that the gains will last.

About 66% of respondents to the bank’s February survey said stocks are experiencing a bear market rally – signaling they expect them to return to new lows. That’s despite the fact that the proportion of investors expecting a global recession has fallen to 24% from a peak of 77% in November. Pessimism about economic growth is at its lowest level in a year, while 83% of fund managers expect inflation to weaken further over the next 12 months, the survey showed.

“Whether bond yields retest the highs and whether we see another bout of stock selling – it’s all the same business: it’s whether or not inflation has peaked,” RBC’s Cole said.

Elsewhere in the markets, oil prices, a key component of inflation, fell after a report that the Biden administration plans to sell more crude from the Strategic Petroleum Reserve. Golden Rose.

Key Events:

• US CPI, New York Fed President John Williams delivers the keynote address at the New York Bankers Association event on Tuesday

• US Retail Sales, UK CPI Wednesday

• US jobless claims, Australian unemployment, Cleveland Fed Chairwoman Loretta Mester speaks at the Global Interdependence Center event on Thursday

• France CPI, Russia GDP Friday

Some of the key movements in the markets:

Shares

• S&P 500 futures were up 0.2% at 5:48 a.m. New York time

• Nasdaq 100 futures up 0.4%

• Futures on the Dow Jones Industrial Average were little changed

• The Stoxx Europe 600 rose 0.5%

• MSCI World Index up 0.2%

currencies

• The Bloomberg Dollar Spot Index fell 0.2%

• The euro rose 0.3% to $1.0753

• The British pound rose 0.4% to $1.2193

• The Japanese yen rose 0.1% to 132.27 per dollar

cryptocurrencies

• Bitcoin rose 0.9% to $21,826.49

• Ether was up 1.7% to $1,511.01

Bind

• The 10-year government bond yield fell one basis point to 3.69%

• The 10-year German government bond yield fell one basis point to 2.36%

• The 10-year UK government bond yield rose one basis point to 3.41%

raw materials

• West Texas Intermediate Crude fell 1.5% to $78.96 a barrel

• Gold futures rose 0.4% to $1,871.10 an ounce

This story was created with the support of Bloomberg Automation.

–With support from Tassia Sipahutar and Sujata Rao.

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