Stocks Edge Higher Before Key US Inflation Reading: Markets Wrap

(Bloomberg) — European stocks advanced and Wall Street equity futures were little changed in the build up to key US inflation data, after a drop in wage-growth expectations eased some of the concern over rising prices.

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Gains in European telecommunications and travel and leisure shares helped push the Stoxx 600 index 0.4% higher. Vodafone Group Plc shares rose after Liberty Global Plc said it had acquired a 4.9% stake in the rival British telecom group. TUI AG climbed after the world’s biggest tour operator said summer bookings are running ahead of pre-pandemic levels.

Futures for the S&P 500 and the tech-heavy Nasdaq 100 steadied after the underlying indexes added more than 1% on Monday, when a survey showed Americans drastically reduced their expectations for household income growth amid tighter monetary policy. Palantir Technologies Inc. rallied as much as 20% in premarket trading, after the data analysis company said it expects 2023 to be its first-ever profitable year.

Whether the Fed views Tuesday’s inflation numbers as “sufficiently ‘compelling’ evidence of disinflation to encourage talk of a policy pause remains to be seen, but the inflationary tides have undoubtedly shifted, with the worst of the cycle in the rear-view mirror,” economists at Rand Merchant Bank in Johannesburg wrote in a note.

The yen rose against most Group-of-10 currencies following the formal nomination of Kazuo Ueda as the next Bank of Japan governor. Traders have recently increased bets that the BOJ’s yield-curve control and negative-rate policies may be abolished soon under Ueda’s leadership.

A gauge of greenback strength slipped, while 10-year US Treasury yields were little changed. The pound climbed after figures showed UK wages rose quicker than expected at the end of 2022, heaping pressure on the Bank of England to deliver another interest-rate increase next month.

US inflation probably accelerated in January to 0.5% from December’s 0.1%, while slowing year-on-year to 6.2% from 6.5%, according to estimates compiled by Bloomberg.

Figures of 6.2% and 0.5% or lower would likely see US equities extend their January rally and break recent highs, Tony Sycamore, a market analyst at IG Australia Pty, wrote in a note. A reading of 6.5% or higher year-on-year would see stocks slump and the dollar rip higher, according to Sycamore.

Bank of America’s latest Global Fund Manager survey showed that investors are the least pessimistic in a year. Still, their positioning in equities remains low, with investors underweight stocks, tech and the US relative to the past 10 years, while being long on bonds, banks, emerging markets and cash.

Elsewhere in markets, oil prices, a key inflation component, fell after a report that the Biden administration plans to sell more crude oil from the Strategic Petroleum Reserve. Gold rose.

Key events:

  • US CPI, UK jobless claims, Eurozone GDP, New York Fed President John Williams gives the keynote speech at New York Bankers Association event Tuesday

  • US retail sales, UK CPI Wednesday

  • US jobless claims, Australia unemployment, Cleveland Fed President Loretta Mester speaks at Global Interdependence Center event Thursday

  • France CPI, Russia GDP Friday

Some of the main moves in markets:


  • The Stoxx Europe 600 rose 0.3% as of 9:22 a.m. London time

  • S&P 500 futures were little changed

  • Nasdaq 100 futures were little changed

  • Futures on the Dow Jones Industrial Average were little changed

  • The MSCI Asia Pacific Index rose 0.6%

  • The MSCI Emerging Markets Index rose 0.2%


  • The Bloomberg Dollar Spot Index fell 0.2%

  • The euro rose 0.2% to $1.0748

  • The Japanese yen rose 0.3% to 132.00 per dollar

  • The offshore yuan was little changed at 6.8208 per dollar

  • The British pound rose 0.2% to $1.2168


  • Bitcoin rose 0.4% to $21,718.53

  • Ether rose 1% to $1,501.36


  • The yield on 10-year Treasuries declined one basis point to 3.69%

  • Germany’s 10-year yield declined three basis points to 2.34%

  • Britain’s 10-year yield was little changed at 3.41%


  • Brent crude fell 0.6% to $86.05 a barrel

  • Spot gold rose 0.4% to $1,860.30 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Isabelle Lee and Tassia Sipahutar.

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