Stocks Rise As Traders Look To US Inflation Data: Markets Wrap

Shares and US equity futures advanced before a report that’s expected to show a slowing in US inflation, which will help shape the outlook for the Federal Reserve’s next steps.

Europe’s Stoxx 600 Index advanced to a three-week high. Energy shares led gains as oil rebounded after OPEC+ leaders Saudi Arabia and Russia reaffirmed their close cooperation to support the crude market. Banks lagged, with Barclays Plc falling as much as 3.8% after Chief Executive C.S. Venkatakrishnan said stagnant deal activity, easing volatility and peaking interest rates are set to weigh on the sector’s earnings.

Among individual movers, Publicis Groupe climbed to the highest level since April after the advertising agency upgraded its full-year organic growth target. EasyJet Plc fell after the airline said it will order an additional 157 Airbus SE A320neo jets, with an option to add 100 more.

US futures climbed after the S&P 500 rose for a fourth day Wednesday, its longest winning streak since August. Ford Motor Co. slipped in pre-market trading after union members went on strike at its largest plant, a highly profitable pickup factory in Kentucky. First Solar Inc. advanced after Barclays upgraded the stock to overweight.

The focus turns next to Thursday’s US consumer price data, which economists are forecasting to show a further easing in inflation. Fed minutes published Wednesday showed officials agreed last month policy should remain restrictive for some time, while noting the risks of overtightening now had to be balanced against keeping inflation on a downward path.

The data “has the ability to challenge the current narrative pushed by the Federal Reserve and finally accepted by markets that interest rates are due to stay higher for longer,” said Julien Lafargue, chief market strategist at Barclays Private Bank. “A cooler-than-expected reading would likely revive calls for the Fed to start cutting rates as early as the first half of next year.”

A gauge of dollar strength fell for a seventh day, set for the longest run of losses in over three years. The Treasury 10-year yield was little changed.

US CPI is forecast to have slowed to an annual rate of 3.6% in September from 3.7% the previous month, according to a Bloomberg survey. Data published Wednesday showed prices paid to producers rose by more than forecast in September, bolstered by higher energy costs.

Fed officials are taking a more patient approach now that rates are at or near their peak, Boston Fed President Susan Collins said Wednesday. Her Atlanta counterpart Raphael Bostic said the central bank doesn’t need to keep tightening unless inflation’s descent starts to stall.

“The less hawkish turn that we’ve seen from the Fed is in part to try and reduce the volatility that we’ve seen in rates markets and to try and bring expectations down to a more reasonable level,” Mehvish Ayub, senior investment strategist at State Street Global Advisors, said on Bloomberg Television.

Meanwhile, the Hang Seng Index jumped as much as 2.2% after China’s state-owned Central Huijin Investment Ltd. increased its stake in the nation’s biggest banks for the first time since 2015. Oil fell for a third day, erasing all of the surge on Monday that followed Hamas’ attack on Israel.

Elsewhere, the pound dipped, snapping a six-day rising streak, after figures showed the UK economy registered a modest rebound in August as the dominant services sector offset another weak month for manufacturers and construction firms.

Key events this week:

• US initial jobless claims, CPI, Thursday
• European Central Bank publishes account of September policy meeting, Thursday
• Fed’s Raphael Bostic speaks, Thursday
• China CPI, PPI, trade, Friday
• Eurozone industrial production, Friday
• US University of Michigan consumer sentiment, Friday
• Citigroup, JPMorgan, Wells Fargo, BlackRock results as the quarterly earnings season kicks off, Friday
• G20 finance ministers and central bankers meet as part of IMF gathering, Friday
• ECB President Christine Lagarde, IMF Managing Director Kristalina Georgieva speak on IMF panel, Friday
• Fed’s Patrick Harker speaks, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.4% as of 6:39 a.m. New York time
• Nasdaq 100 futures rose 0.4%
• Futures on the Dow Jones Industrial Average rose 0.4%
• The Stoxx Europe 600 rose 0.8%
• The MSCI World index rose 0.3%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0621
• The British pound fell 0.1% to $1.2298
• The Japanese yen was little changed at 149.12 per dollar

Cryptocurrencies

• Bitcoin rose 0.1% to $26,756.34
• Ether fell 1% to $1,547.83

Bonds

• The yield on 10-year Treasuries was little changed at 4.55%
• Germany’s 10-year yield was little changed at 2.72%
• Britain’s 10-year yield advanced one basis point to 4.34%

Commodities

• West Texas Intermediate crude rose 1% to $84.30 a barrel
• Gold futures rose 0.3% to $1,893.80 an ounce

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