Stock markets edged higher on Tuesday while the dollar fell. Ahead of the widely expected US inflation report that investors will scrutinize for clues about future monetary policy trajectories.
Germany’s Dax and London’s FTSE 100 also posted modest gains, while the European region’s Stox 600 rose 0.2% in morning trading and 1.8% in earlier trading. In Asia, mainland China’s CSI 300 Index rose 0.4%, while Hong Kong’s Hang Seng Index fell 0.2%. Japan’s Topix rose 0.3%.
A brief rally in stocks happened when investors got ahead US inflation Data will be released at 1:30pm BST. Economists polled by Reuters expect the consumer price index to fall to 8.1% year-on-year in August, down from 8.5% in July.
However, core CPI, which excludes volatile items such as energy and food, is projected to rise from 5.9% to 6.1% in the world’s largest economy.
“The market is betting on slowing inflation,” said Nadège Dufosse, head of cross-asset strategy at Candolium. “If core inflation has a negative surprise, it will of course have a negative impact on the market.”
Tuesday’s data, which will be closely evaluated by traders ahead of the Federal Reserve’s next monetary policy meeting in late September, has pushed the market to a third consecutive 0.75 percentage point rate hike by the central bank. woven in. Federal Reserve Board The current target range is 2.25-2.50%.
Equity markets have fallen this year, with the FTSE gauge of global equities down 16% as the US Federal Reserve (Fed) and other major central banks have raised borrowing costs to curb inflation.
Christina Hooper, chief global market strategist at Invesco, said the U.S. economy “remains fundamentally healthy,” but the Fed said it “will take time for the negative effects of the tightening so far to show up in the economy.” I readily acknowledged this,” he added.
Hooper added that the Federal Reserve “will honor its promise to rely on data, and it is still quite possible that it can provide the only data.” [0.5 percentage point] Hiking in September”.
The dollar has weakened in recent days and the euro has gained on the back of a 3/4 percentage point rise in interest rates. European Central Bank Last Thursday — Shows policy divergence between the Fed and ECB has narrowed.
The dollar fell 0.3% against a basket of six other currencies on Tuesday after falling 0.7% in previous trading.
Futures contracts that track Wall Street’s broad S&P 500 stock index added 0.4%, often rising as the dollar weakens due to its weight in multinationals.
In the Treasury market, the 10-year US Treasury yield fell 0.04 points to 3.32%.
Germany’s equivalent yield rose 0.02 points to 1.66%, below the consensus forecast of -60, after the Zew Institute September investor forecast for the German economy fell to -61.9.
https://www.ft.com/content/96bb6e37-9116-47d9-98f3-5cee3e9c7c09 Stocks grow gains ahead of US inflation report