New York, NY – Global markets are eagerly awaiting the release of US inflation data, which could potentially impact the Federal Reserve’s approach to combating inflation. The US is set to unveil its annual revisions to the consumer price index at 8:30 a.m. New York time, with many speculating on the possible implications for interest rate cuts by the Federal Reserve.
Last year’s update caused uncertainty regarding overall inflation progress and now traders are anxiously anticipating the outcome of the recalculations, as it may influence the timing of the Federal Reserve’s decision to cut interest rates. Analysts at Rabobank emphasized the potential significance of this data, as it could either increase or decrease the Federal Open Market Committee’s confidence in achieving a sustainable return to 2% inflation.
US stock-index futures and Europe’s Stoxx 600 saw modest gains, while there was a slight dip in ten-year Treasuries, resulting in a yield increase of over 15 basis points in the past five days. The upcoming US inflation print due on Tuesday will serve as the next critical data point for market analysis.
In premarket trading, PepsiCo Inc. shares slipped after releasing a disappointing sales forecast. Additionally, L’Oreal experienced a 7% drop due to decreased travel spending among Chinese shoppers, while Tesco Plc saw an advance following Barclays Plc’s decision to acquire a significant portion of the supermarket chain’s banking business.
The uncertain language on rate cuts from central bank policy makers has left bond traders in a state of limbo, with Fed Chair Jerome Powell’s reluctance to entertain a March reduction fueling derivative trades betting on a drop in bond market volatility. The S&P 500 briefly reached the 5,000 mark for the first time, further underscoring the ongoing positive streak in US equities that have only seen one weekly drop since late October.
Asian markets remained closed for the Lunar New Year holidays in mainland China, Taiwan, South Korea, Indonesia, the Philippines, and Vietnam. Meanwhile, the Japanese yen stabilized after a decline triggered by comments from a Bank of Japan deputy governor indicating the central bank’s reluctance to change its current easy policy settings.
Corporate highlights included PepsiCo forecasting full-year profit growth, Barclays’ agreement to acquire Tesco’s retail banking unit, a surge in Hermes sales, and the revival of talks between Grab Holdings Ltd. and GoTo Group for a potential merger.
This week saw various shifts in the stock market, with the Stoxx Europe 600 rising 0.2%, S&P 500 futures up 0.1%, Nasdaq 100 futures up 0.3%, and MSCI Asia Pacific Index falling by 0.2%. Additionally, there were shifts in currencies, cryptocurrencies, bonds, and commodities, all contributing to the dynamic nature of global markets at present.