(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.
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.
“The Fed is as uncertain on the inflation outcome as we are,” said Adam Cole, head of currency strategy at RBC Europe in London. That means the focus on “the incremental news each month on CPI is incredibly high,” he said.
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.
Meanwhile, Bank of America Corp.’s latest global fund manager survey suggests that while equity markets are on a relentless march higher amid optimism around stronger economic growth and cooling inflation, most investors aren’t convinced the gains will last.
About 66% of participants in the bank’s February survey said stocks are seeing a bear market rally — signaling they expect them to return to new lows. That’s even as the share of investors expecting a global recession fell to 24%, down from a peak of 77% in November. Pessimism around economic growth is at its lowest in a year, while 83% of fund managers see inflation easing further over the next 12 months, the survey showed.
“Whether bond yields retest the highs and whether we get another phase of the equity selloff — it’s all the same trade: it’s whether or not inflation has peaked,” RBC’s Cole said.
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.
US CPI, 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 0.4% as of 10:13 a.m. London time
S&P 500 futures rose 0.1%
Nasdaq 100 futures rose 0.2%
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 0.3% to $1.0758
The Japanese yen rose 0.2% to 132.17 per dollar
The offshore yuan was little changed at 6.8210 per dollar
The British pound rose 0.5% to $1.2200
Bitcoin rose 0.9% to $21,826.92
Ether rose 1.8% to $1,513.11
The yield on 10-year Treasuries was little changed at 3.70%
Germany’s 10-year yield declined one basis point to 2.36%
Britain’s 10-year yield advanced two basis points to 3.42%
Brent crude fell 0.9% to $85.80 a barrel
Spot gold rose 0.4% to $1,861.31 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Tassia Sipahutar and Sujata Rao.
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