US Futures Mark Time in Inflation-Day Waiting Game: Markets Wrap

US Futures Mark Time in Inflation-Day Waiting Game: Markets Wrap

(Bloomberg) — An anxious wait for US inflation figures that will provide clues on the outlook for interest rates kept market moves in check on Wednesday.

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US equity futures were little changed before data expected to show some moderation in price pressures following stronger readings at the start of the year. Treasuries and the dollar were also steady.

Economists forecast that consumer prices rose 0.3% in March on a monthly basis, both overall and excluding food and energy costs. While that would mark a step down from the previous two months, it may not be enough for Federal Reserve officials looking for even lower readings.

A hot number could “put a question mark on whether the Fed will cut at all this summer and will it be a September time frame,” said Guy Miller, chief strategist at Zurich Insurance Co. This would mean a further delay and “markets are very vulnerable to that as we have seen significant multiple expansion in the past 12 months,” he said.

Wall Street traders predict stocks could move 2% either way on a surprise inflation number. Both JPMorgan Chase & Co. and Goldman Sachs Group Inc. trading desks see stocks falling some 2% if the consumer price index tops 0.4% in March on a monthly basis. However, both banks say they view any hit to the market as temporary.

“This bull market continues irrespective of what happens with CPI,” said JPMorgan’s Market Intelligence traders led by Andrew Tyler. They point to a supportive backdrop, where the economy and corporate profits are growing and the Fed is on pause.

Meanwhile, leading market strategists are optimistic that Corporate America can help fuel the next leg of the stock market rally by delivering another bumper earnings season. Even pricey technology stocks — the primary profit engine in the previous quarter — are again expected to be supported by solid results.

While the S&P 500 Index is coming off its best first quarter in five years and trading near its all-time high, market experts are reluctant to bet against further gains.

“It’s way too early to apply the brakes on the US stock rally,” said Manish Kabra, head of US equity strategy at Societe Generale SA. “The momentum has been backed up by the earnings outlook, and I expect that to continue for at least one more quarter.”

Earnings for S&P 500 companies are expected to post a “healthy” 10% gain in the first quarter in headline numbers from a year ago, according to Deutsche Bank AG strategists. Earnings upgrades from analysts have outnumbered downgrades in the first quarter, according to a Citigroup Inc. index.

In Europe, the Stoxx 600 index was higher Wednesday, rebounding from the previous session’s losses, as surging sales at Taiwan Semiconductor Manufacturing Co. from the boom in global AI development boosted tech stocks. Miners advanced after gains in copper, iron ore and gold. Tesco Plc rose as it forecast higher retail profit and announced a share buyback. US stock futures were little changed.

The gains come a day before an interest-rates announcement from the European Central Bank that’s widely expected to prepare markets for an initial cut in June as price pressures in the region ease.

In commodities markets, copper extended its rally to $9,500 a ton amid supply risks and a brightening outlook for demand. Prices have risen more than 10% on the London Metal Exchange this year, making copper one of the best-performing industrial metals.

Iron ore was near a two-week high following a 10% surge fueled by bets that a recent slump was overdone. Gold held a record high as investors positioned for the inflation data. Oil was steady following back-to-back losses after an industry report pointed to a gain in US crude stockpiles, although simmering tensions in the Middle East are expected to cap losses.

In Asia, an index of Hong Kong-listed Chinese stocks gained for the third day and entered a technical bull market after advancing 20% from a January low.

TSMC’s quarterly revenue grew at its fastest pace in more than a year, shoring up expectations that a global boom in artificial intelligence development is fueling demand for high-end chips and servers. The main chipmaker to Nvidia Corp. and Apple Inc. reported a better-than-expected 16% rise in March-quarter sales to about NT$592.6 billion ($18.5 billion), versus the NT$579.5 billion average projection.

Key events this week:

  • Canada rate decision, Wednesday

  • US CPI, Fed minutes, Wednesday

  • Chicago Fed President Austan Goolsbee speaks, Wednesday

  • China PPI, CPI, Thursday

  • Eurozone ECB rate decision, Thursday

  • US initial jobless claims, PPI, Thursday

  • New York Fed President John Williams speaks, Thursday

  • Boston Fed President Susan Collins speaks, Thursday

  • China trade, Friday

  • US University of Michigan consumer sentiment, Friday

  • Citigroup, JPMorgan and Wells Fargo due to report results, Friday.

  • San Francisco Fed President Mary Daly speaks, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures rose 0.1% as of 7:36 a.m. New York time

  • Nasdaq 100 futures were little changed

  • Futures on the Dow Jones Industrial Average rose 0.2%

  • The Stoxx Europe 600 rose 0.7%

  • The MSCI World index rose 0.1%

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.0862

  • The British pound rose 0.1% to $1.2696

  • The Japanese yen was little changed at 151.83 per dollar

Cryptocurrencies

  • Bitcoin fell 0.1% to $69,048.91

  • Ether rose 0.2% to $3,519.17

Bonds

  • The yield on 10-year Treasuries declined one basis point to 4.35%

  • Germany’s 10-year yield declined one basis point to 2.36%

  • Britain’s 10-year yield was little changed at 4.02%

Commodities

  • West Texas Intermediate crude rose 0.6% to $85.78 a barrel

  • Spot gold fell 0.2% to $2,346.99 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Winnie Hsu.

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