Stocks in Europe rose 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 Labor Department will report April consumer inflation later on Wednesday. Price trends help shape Federal Reserve policy regarding rate hikes, which in turn can slow economic growth by making borrowing more expensive.
Rising inflation is causing central banks and governments in many countries to scale back support for markets and businesses during the peak of the pandemic. Investors, in turn, are adjusting their asset allocations to reflect the changing political landscape.
Germany’s DAX rose 1.1% to 13,679.24 and the CAC 40 in Paris rose 2.1% to 6,242.50. Britain’s FTSE 100 rose 1.3% to 7,334.70.
Futures for the S&P 500 rose 1.1% and those for the Dow Industrial rose 0.9%. Stocks ended Tuesday on Wall Street mixed after a rally in technology 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 reported lower-than-expected gains for the month of April. Annualized inflation was 2.1%. Prices rose 0.4% from the previous quarter.
Moderating price hikes gives authorities more leeway for stimulus spending to counter the impact of lockdowns in many major cities to combat coronavirus outbreaks.
Hong Kong’s Hang Seng rose 1% to 19,824.57 and the Shanghai Composite Index rose 0.8% to 3,058.70.
“In the context of the inflation landscape elsewhere in the world, China is in a very good spot right now, markets are pricing today that this gives the Chinese government leeway to unleash some juicy stimulus,” Oanda’s Jeffrey Halley said in a comment.
Tokyo’s Nikkei 225 rose 0.2% to 26,213.64, while the S&P/ASX 200 rose 0.2% to 7,064.70. In Seoul, the Kospi slipped 0.2% to 2,592.27.
The Labor Department’s consumer price report is expected to show a slowdown in price increases in April. On Thursday, the government will release its April report on producer prices, or wholesale prices, affecting businesses.
“Some wait and see is largely in place as participants refrain from taking undue risk while waiting to see how markets will react to the expected fall in US CPI — the first in seven months,” IG’s Jun Rong Yeap said in a Comment.
The yield on the 10-year Treasury fell to 2.93% from 2.99% late Tuesday.
Treasury yields have risen and stocks have been extremely volatile of late as Wall Street adjusts to moves by the central bank to raise interest rates from historic lows to combat persistently rising inflation, which is at its highest in four decades located.
The central bank has raised its policy rate from near zero, where it spent much of the coronavirus pandemic. Last week it said it would double the size of future increases.
Higher prices for raw materials, shipping and labor have impacted companies’ financial results and forecasts. Many companies have hiked prices on everything from clothing to groceries, raising concerns that consumers will eventually cut back on spending, which would hurt 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 cost of essential commodities like wheat. Wheat prices have increased by more than 40% over the year.
U.S. crude prices are up about 36% in 2022. The US benchmark gained $3.49 to $103.25 a barrel in electronic trading on the New York Mercantile Exchange on Wednesday. On Tuesday, it fell 3.2%.
Brent crude, the basis for oil prices in international trade, jumped $3.51 to $105.97 a barrel.
In forex trading, the dollar slipped from 130.43 yen to 129.66 Japanese yen. The euro rose to $1.0576 from $1.0532.
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https://www.local10.com/business/2022/05/11/european-shares-gain-asia-mixed-ahead-of-us-inflation-data/ European stocks gain, Asia mixed ahead of US inflation data