📈 69% of S&P 500 stocks beating the index - a historic record! Pick the best ones with AI.See top stocks

Shares nudge higher as US, EU inflation data loom

Published 05/26/2024, 08:24 PM
Updated 05/27/2024, 10:45 PM
© Reuters. File photo: A media person stands in front of the stock quotation board during a ceremony marking the end of trading in 2022 at the Tokyo Stock Exchange (TSE) in Tokyo, Japan December 30, 2022. REUTERS/Issei Kato/File photo

By Nell Mackenzie

LONDON (Reuters) - World shares firmed on Monday as investors braced for a busy run of inflation data that could set the scene for a European rate cut as soon as next week and a U.S. policy easing within just a few months.

Holidays in Britain and the United States made for thin trading ahead of Friday's figures on core personal consumption expenditures (PCE), the Federal Reserve's preferred measure of inflation.

MSCI's broadest index of stocks gained 0.2%, having slipped 0.38% last week and just shy of an all-time peak of over 796.

"The pathway to the Federal Reserve's 2% target appears longer and more arduous than anticipated last year," Bruno Schneller, managing director at Erlen Capital Management, said.

Median forecasts expect this week will see a rise of 0.3% in the PCE price index in April according to a Reuters poll, keeping the annual pace at 2.8%, with risks on the downside.

U.S. economic recovery remains uneven, with sectors such as manufacturing showing signs of slowdown, while services remain resilient, Schneller told Reuters.

"This complex scenario likely delays any potential rate cuts to late 2024 or beyond, requiring continuous monitoring of incoming data to gauge the appropriate timing and pace of monetary policy adjustments," he added.

Figures for inflation in the euro zone are also due on Friday and economists believe an expected tick up to 2.5% should not stop the European Central Bank from easing policy next week.

Policymakers Piero Cipollone and Fabio Panetta both flagged a coming cut over the weekend, while markets imply an 88% chance of an easing to 3.75% on June 6.

By Thursday, the ECB will enter a quiet period before its June 6 meeting, analysts at Societe Generale (OTC:SCGLY) noted.

"Questions have been raised on how the latest wage data gel with the view that wage growth is easing, and we may hear more ECB speakers stressing that the 1Q data have been affected by temporary factors," their note said.

The Bank of Canada might also ease next week, while the Fed is seen waiting until September for its first move.

At least eight Fed officials are due to speak this week, including two appearances by the influential head of the New York Fed, John Williams.

The head of the Bank of Japan (BOJ) said on Monday it would proceed cautiously with inflation-targeting frameworks, adding that some challenges were "uniquely difficult" for Japan after years of ultra-easy monetary policy.

The BOJ holds its policy meeting on June 14 and there is some chance it may buck the global trend and hike rates again, albeit to a modest 0.15%.

WAITING GAME

European stocks were subdued on Monday, with several major markets closed and investors taking a cautious stance ahead of this week's inflation data.

The pan-European STOXX 600 index was up 0.2% at 1228 GMT. With the U.S. and UK markets closed on Monday, trading activity was light across the board.

S&P 500 and Nasdaq futures remained steady, as the market would next open on Tuesday. The Nasdaq hit record highs last week after Nvidia (NASDAQ:NVDA) beat expectations.

In currency markets, attention was again centred on the yen and the risk of Japanese intervention ahead of the 160.00 level. The dollar stood at 156.84 yen, having added 0.9% last week and close to its recent top of 160.245.

Japan renewed its push to counter excessive yen falls during a weekend gathering of Group of Seven (G7) finance leaders, after a recent rise in bond yields to a 12-year high failed to slow the currency's decline.

The euro steadied at $1.0850, and short of its recent top at $1.0895.

Gold rose about 0.6% to $2,348 an ounce, having recoiled 3.4% last week and off an al-time peak of $2,449.89. [GOL/]

© Reuters. File photo: A media person stands in front of the stock quotation board during a ceremony marking the end of trading in 2022 at the Tokyo Stock Exchange (TSE) in Tokyo, Japan December 30, 2022. REUTERS/Issei Kato/File photo

Oil prices were stuck near four-month lows amid concerns about demand, as the U.S. driving season gets underway this week. Investors are waiting to see if OPEC+ will debate new output cuts at an online meeting on June 2, though analysts doubt there will be a consensus for a move. [O/R]

Brent was up 55 cents at $82.67 a barrel, while U.S. crude rose 55 cents to $778.27 per barrel.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.