Stocks rise, dollar retreats ahead of inflation data

London, July 11 (BNA): Global stocks rose and the dollar fell today, Tuesday, ahead of US inflation data that may support a faster end to interest rate hikes by the Federal Reserve, while the prospect of China supporting economic growth helped lift commodity prices such as oil and copper. .

According to Reuters, markets are awaiting US inflation data on Wednesday to see if price pressures continue to moderate, which could provide clues to the interest rate outlook.

The MSCI All-World Index rose 0.3%, supported by gains in European stocks, as the STOXX 600 index rose 0.35% in early trading, and from Chinese stocks in Asia, after expanding support for the real estate sector.

US stock index futures rose 0.1-0.2%, indicating a modest rally at the opening bell.

Investors were digesting comments from several Federal Reserve officials on Monday who said that the level of inflation justifies additional interest rate hikes, but that the central bank is nearing the end of the current monetary tightening cycle.

Economists polled by Reuters had expected the consumer price index to have risen 3.1% in June, after a 4% increase in May. This would be the lowest reading since March 2021. The base rate for the third month is expected to drop to 5% from 5.3%, but that’s still more than double the Fed’s target of 2%.

Last week’s employment report showed that much fewer workers than expected were added to non-farm payrolls last month which unleashed a sell-off in the US dollar, but did little to change the needle in terms of interest rate expectations.

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The dollar index, which measures the performance of the greenback against six others, fell 0.2% on the day and is near its lowest level in two months, in line with a decline in US Treasury yields.

The yield on the benchmark 10-year note fell 4 basis points to 3.964%, after breaking below 4% a day earlier.

“While there is growing evidence of anti-inflationary trends in the near term, questions remain about whether inflation will persist at uncomfortably high levels in the medium term,” said Jim Reed, strategist at Deutsche Bank.

The Japanese yen rose to a one-month high against the dollar, leaving the greenback down 0.6% on the day at 140.51, tracking declines in Treasury yields.

Meanwhile, the prospect of a strengthening of the broader Chinese economy has helped drive prices for crude oil and other industrial commodities such as copper and iron ore.

Chinese regulators on Monday extended some of the policies in a bailout package introduced in November to shore up liquidity in the beleaguered real estate sector.

Brent crude, which struggled to pull back from 18-month lows, rose 0.4% to $78 a barrel, while US futures rose 0.5% to $73.35.

Copper rose 0.5% on the London Metal Exchange to trade at around $84,000 a ton. The price is heading for its first annual loss since 2018, due in large part to erratic demand from China.

Second-quarter earnings were released this week, with results due from some of the biggest institutions on Wall Street, including JPMorgan, Citigroup and Wells Fargo.

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Analysts expect earnings to contract 6.4% in the second quarter year over year, according to IBES data from Refinitiv.


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