European stocks rose, and Wall Street stock futures were little changed on US inflation data after a drop in wage growth expectations dampened jitters about rising prices.
Gains in EU telecoms and travel & leisure stocks helped lift the Stoxx 600 Index by 0.44%. Vodafone Group Plc shares rose after Liberty Global Plc said it had bought a 4.92% stake in the rival British telecoms group. TUI AG rose after the world’s largest tour operator said summer bookings are above pre-pandemic figures.
Futures for the S&P 500 and the tech-heavy Nasdaq 100 were flat after the major indices rose more than 1.5% on Monday. A survey showed that Americans slashed their expectations for rising household incomes as a result of tighter monetary policy. Palantir Technologies Inc. rose 20.4% in premarket trading after the data analytics firm said 2023 would be its first profitable year.
Whether the Fed will regard Tuesday’s inflation numbers as “convincing enough” evidence of disinflation to prompt talk of a policy pause remains to be seen. Still, the inflation data has certainly turned, with the worst hindsight for the cycle in the spectrum.
The dollar strength index fell, while the 10-year US Treasury yield was little changed. The pound rose after data showed UK wages rising faster than expected by the end of 2022, increasing pressure on the Bank of England to raise yet another interest rate next month.
US stock futures hold steady
US stock futures delayed further gains on Tuesday as traders eyed key inflation data.
On Monday, the Dow Jones Industrial Average rose 377 points, or 1.12%, to 34,246, the S&P 500 rose 47 points, or 1.15%, to 4,136 and the Nasdaq Composite rose 174 points, or 1. 47% By %, up to 11893.
The Nasdaq Composite is up 13.7% in 2023, but remains 25.92% below the all-time high set in November 2021.
Economists expect the annual CPI inflation rate to decline from 6.52% in December to 6.22% last month and for the core measure, which excludes particularly volatile items such as food and energy, to fall from 5.72 % to 5.42%. The numbers are expected to rise 0.41% on the month, compared with minus 0.11% in December, with core unchanged at 0.31%.
Disinflation in recent months has encouraged investors to hope that the Federal Reserve will soon stop raising interest rates, allowing the economy to avoid a sharp contraction and thus supporting corporate profits. That narrative has helped propel the S&P 500 7.81% this year.
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