Stocks rose in Europe on Wednesday after a mixed day in Asia ahead of the release of US inflation data. US futures and oil prices were also higher.
The Department of Labor will report consumer inflation for the month of April later on Wednesday. Price trends help shape the Federal Reserve’s policy of raising interest rates, which in turn can slow economic growth by making borrowing more expensive.
Soaring inflation is prompting central banks and governments in many countries to limit support for markets and businesses at the height of the pandemic. Investors, in turn, adjust their asset allocations to reflect the changing political landscape.
The German DAX jumped 1.1% to 13,679.24 and the CAC 40 in Paris jumped 2.1% to 6,242.50. Britain’s FTSE 100 rose 1.3% to 7,334.70.
The S&P 500 futures rose 1.1% and the Dow Industrials futures gained 0.9%. Stocks ended mixed on Wall Street on Tuesday after a rally in tech companies helped reverse most of an early decline. The S&P 500 rose 0.2% while the Dow Jones Industrial Average fell 0.3%. The Nasdaq composite rose 1%.
Chinese stocks rose after the government announced lower-than-expected price hikes for April. In annual terms, inflation stood at 2.1%. Prices rose 0.4% from the previous quarter.
Moderating price increases give authorities more leeway for stimulus spending to counter the impact of shutdowns in many major cities to fight coronavirus outbreaks.
Hong Kong’s Hang Seng rose 1% to 19,824.57 and the Shanghai Composite Index climbed 0.8% to 3,058.70.
“Against the backdrop of the inflation landscape elsewhere in the world, China is currently in a very favorable position, markets today believe this gives the Chinese government the opportunity to trigger a juicy stimulus,” said Jeffrey Halley. from Oanda in a comment.
Tokyo’s Nikkei 225 added 0.2% to 26,213.64, while the S&P/ASX 200 edged up 0.2% to 7,064.70. In Seoul, the Kospi slipped 0.2% to 2,592.27.
The Labor Department’s report on consumer prices is expected to show that price increases slowed in April. On Thursday, the government will release its April report on producer prices, or wholesale prices that impact business.
“A certain wait-and-see attitude is largely in place as participants refrain from taking excessive risks while awaiting the market reaction to the expected drop in the US CPI – the first in seven months,” Jun Rong Yeap said. IG in a statement. remark.
The 10-year Treasury yield fell to 2.93% from 2.99% on Tuesday evening.
Treasury yields have risen and equities have been extremely volatile lately as Wall Street adjusts to central bank moves to raise interest rates from historic lows to combat the persistent rise in l inflation, which is at its highest level in four decades.
The central bank raised its benchmark rate from near zero, where it has sat for much of the coronavirus pandemic. Last week, he indicated he would double the size of future increases.
Higher prices for raw materials, shipping and labor have reduced financial results and company forecasts. Many companies have hiked prices for everything from clothes to food, raising fears that consumers may cut back on spending, hurting economic growth.
Russia’s ongoing invasion of Ukraine has pushed already high oil and natural gas prices even higher, while putting further pressure on the costs of key food commodities such as wheat. Wheat prices have increased by more than 40% over the year.
U.S. crude oil prices are up about 36% in 2022. The U.S. benchmark gained $3.49 to $103.25 a barrel Wednesday in electronic trading on the New York Mercantile Exchange. It fell 3.2% on Tuesday.
Brent crude, the pricing basis for oil in international trade, jumped $3.51 to $105.97 a barrel.
In currency trading, the dollar slipped to 129.66 Japanese yen from 130.43 yen. The euro fell from $1.0532 to $1.0576.