Global stocks rose on Tuesday and the dollar retreated, a day ahead of US inflation data that could warrant a quicker end to the Federal Reserve’s rate hikes, while the prospect of China’s pick-up in growth helped push oil and other commodities higher. propel.
On Wall Street, the Dow Jones Industrial Average rose 0.66% to 34,169.77, the S&P 500 gained 0.34% to 4,424.45 and the Nasdaq Composite added 0.17% to 13,709.10.
The MSCI All-World index rose 0.64%, supported by gains in European equities, and the STOXX 600 rose 0.72%.
Investors on Monday digested comments from several Federal Reserve officials who said inflation levels warranted additional rate hikes, but that the central bank is nearing the end of its monetary tightening cycle.
Economists polled by Reuters expect the consumer price index, released Wednesday morning, to rise 3.1% in June, following May’s 4% rise. That would be the lowest level since March 2021. Core interest rates are expected to have fallen from 5.3% to 5% for a third month, although that is more than double the Fed’s 2% target.
Last week’s employment report showed far fewer workers than expected were added to nonfarm payrolls last month, sparking US dollar sales but doing little to shift the needle in terms of interest rate expectations.
“(Market) movements, especially between the jobs report and inflation when they are so close, I take with a relative grain of salt,” said OANDA market strategist Craig Erlam.
“Huge attention is being paid to tomorrow’s inflation data – it comes too late the day before the July meeting. That increase is effectively sealed and it would take something quite weak on the inflation side to change that,” he said.
The next Fed policy meeting is July 25 and 26.
Second quarter results will also be on the watch this week with results from some of Wall Street’s biggest institutions, including JPMorgan, Citigroup and Wells Fargo.
Analysts expect Q2 earnings to have contracted 6.4% year over year, according to Refinitiv IBES data.
FLASHING DOLLAR
The dollar index, which measures the performance of US currencies against a basket of others, fell 0.28% on the day to about a two-month low, in line with a decline in US Treasury yields.
Against the yen, the dollar fell to a two-month low, down about 0.7%, while the pound hit a 15-month high after wage growth beat expectations.
Brown Brothers Harriman currency strategists wrote in a note Tuesday that, despite recent pressures, “the fundamental narrative remains in favor of the dollar…and markets still see significant risks of a second rate hike by the Fed this year.”
Longer-dated US Treasury yields fell on Tuesday as investors awaited Wednesday’s inflation data for further clues on whether price pressures are easing and whether the Fed is closer to the end of its cycle of rate hikes.
The return on the 10-year benchmark fell 3.2 basis points to 3.974%, after falling below 4% the day before.
“While there is increasing evidence of near-term disinflationary trends, questions remain as to whether inflation will remain uncomfortably high over the medium term,” said Jim Reid, Deutsche Bank strategist.
RAW MATERIALS
The prospect of a boost to the broader Chinese economy helped drive up the price of crude oil and other industrial commodities such as copper and iron ore.
Chinese regulators on Monday extended some policies in a rescue package introduced in November to bolster liquidity in the real estate sector.
Brent crude, which has struggled to break its 18-month lows, stood at $79.31, up 2.09% on the day. US crude rose 2.38% to $74.73 a barrel. Traders weighed supply constraints by the world’s top oil exporters and expectations of higher demand in developing countries in the second half of 2023 against the sluggish global economic outlook.
The gold price reached a high in almost three weeks. Spot gold added 0.35% to $1,931.75 an ounce.
(This story has not been edited by News18 staff and was published from a syndicated news agency feed – Reuters)
