Global stocks mixed ahead of US inflation update

By AP News


Global stock markets are mixed ahead of a U.S. inflation update that traders worry might lead to more interest rate hikes

South Korea Financial Markets

BEIJING (AP) — Global stock markets were mixed Monday ahead of a U.S. inflation update traders worry might lead to more interest rate hikes.

London opened higher and Shanghai advanced. Frankfurt, Tokyo and Hong Kong declined. Oil prices fell.

Traders hope Tuesday's inflation data will show upward pressure on U.S. prices is easing, which might encourage the Federal Reserve to ease off efforts to cool business activity and hiring. They worry a strong reading after estimates of 2022 inflation were revised up last week would reinforce plans to keep rates high and possibly increase them.

A strong inflation figure “can move through risk assets like a wrecking ball,” said Stephen Innes of SPI Asset Management in a report.

In early trading, the FTSE 100 in London rose 0.3% to 7,903.02. The DAX in Frankfurt sank 1.4% to 15,307.98 and the CAC 40 in Paris shed 0.8% to 7,129.73.

On Wall Street, futures for the benchmark S&P 500 index and the Dow Jones Industrial Average were up 0.3%.

On Friday, the S&P 500 index rose 0.2%. The index turned in a weekly loss of 1.1%, its biggest since December.

The Dow gained 0.5% and the Nasdaq fell less than 0.1%.

In Asia, the Nikkei 225 in Tokyo sank 0.9% to 27,427.32 while the Shanghai Composite Index advanced 0.6% to 3,279.94. The Hang Seng in Hong Kong lost 0.4% to 21,099.65.

The Kospi in Seoul declined 0.6% to 2,453.89 and Sydney's S&P-ASX 200 shed 0.2% to 7,417.80.

India's Sensex opened down 0.5% to 60,386.40. New Zealand and Singapore retreated while Jakarta and Bangkok gained.

U.S. stocks have been rallying since last month on hopes the Fed might start cutting rates as early as late this year. That is despite warnings by Chair Jerome Powell that rates will stay elevated for an extended period until inflation pressures are extinguished.

Other central banks in Europe and Asia also have raised rates to cool inflation.

Wall Street raised its forecast of how high the Fed might raise rates after Powell said last week there is a “significant road ahead” to get inflation down to its 2% target. He warned against expecting inflation to “go away quickly and painlessly.”

The U.S. government revised December inflation to 0.1% over the previous month, up from the earlier estimate of a 0.1% decline. The November figure was raised to 0.2% over the previous month from 0.1%.

Traders expect Tuesday's report to say consumer prices rose 0.5% in January over the previous month.

The yield on the 10-year Treasury bond, or the difference between the market price and the payout at maturity, widened to 3.73% on Friday from 3.66%.

The yield on the two-year Treasury ticked up to 4.50% from 4.48%. It was at 4.08% just over a week earlier and is near its highest level since November.

Equities analysts have cut forecasts of first-quarter earnings for companies in the S&P 500 by 4.5% due to the impact of inflation and slowing economic activity, according to strategists at Credit Suisse.

News Corp. fell 9.4% after the owner of The Wall Street Journal and other media reported weaker quarterly results than expected. Expedia lost 8.6% after reporting weaker profit and revenue for the latest quarter than expected.

Oil prices fell back following a surge Friday after Russia said it would cut production by 500,000 barrels per day next month. Western governments have imposed an upper limit on how much they will allow customers to pay for Russian crude to punish Moscow for its invasion of Ukraine.

In energy markets, benchmark U.S. crude lost 84 cents to $78.88 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.66 to $79.72 on Friday. Brent crude, the price basis for international oil trading, shed 81 cents to $85.58 per barrel in London. It gained $1.89 on Friday to $86.39.

The dollar gained to 132.27 yen from Friday's 131.50 yen. The euro declined to $1.0666 from $1.0672.


Author: AP News

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