Stocks rise, dollar falls ahead of US inflation data

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: Global stocks rose on Tuesday ahead of U.S. inflation data that could warrant an early end to the Fed’s rate hikes, the dollar retreated while China is expected to support growth helped boost oil and other commodity prices.

On Wall Street, the Dow Jones Industrial Average rose 0.66% to $34,169.77, the S&P 500 rose 0.34% to $4,424.45, and the Nasdaq Composite rose 0.17% to $13,709.10.

The MSCI All World Index rose 0.64% on the rise in European stocks, while the STOXX600 Index rose 0.72%.

Investors on Monday digested comments from several Fed officials who said the Fed was nearing the end of its tightening cycle, although inflation levels justified further rate hikes.

Economists polled by Reuters expect the consumer price index, released Wednesday morning, to rise 3.1% in June, following a 4% gain in May. This is the lowest level since March 2021. The core rate is expected to drop to 5% from 5.3% for the third month in a row, more than double the Fed’s 2% target.

Last week’s jobs report showed far fewer jobs were added to last month’s nonfarm payrolls than expected, which prompted a US dollar sell-off, but little to change the direction of interest rate expectations. didn’t help.

“We take (market) moves relatively conservatively, especially when jobs and inflation are very close,” said Craig Earlham, market strategist at OANDA.

“Tomorrow’s inflation numbers will have a lot of attention. It’s too late for the July meeting,” he said. ‘ said.

The Fed’s next policy meeting will be held on July 25-26.

Second-quarter earnings will also be on the radar as Wall Street’s biggest financial institutions, including JP Morgan, Citigroup and Wells Fargo, report results this week.

Analysts expect second-quarter earnings to fall 6.4% from a year earlier, according to IBES data from Refinitiv.

soaring dollar

The dollar index, which shows the performance of the US currency against a basket of other currencies, fell 0.28% on the day to near a two-month low as yields on US Treasuries fell.

Against the yen, the dollar fell to a two-month low of about 0.7%, while the pound hit a 15-month high after better-than-expected wage growth.

Currency strategists at Brown Brothers Harriman said in a note Tuesday that despite recent pressures, “the fundamental story continues to favor the dollar and markets still pose significant risks to the Fed’s second rate hike this year. I’m watching,” he said.

Long-term US Treasury yields fell on Tuesday as investors waited for Wednesday’s inflation data for more clues as to whether price pressures were easing and whether the Fed was nearing the end of its rate-hiking cycle.

The benchmark 10-year yield fell 3.2 basis points to 3.974%, falling below 4% a day earlier.

“While there is mounting evidence of a near-term disinflationary trend, questions remain about whether inflation will persist at uncomfortably high levels over the medium term,” said Jim Reed, a strategist at Deutsche Bank. rice field.

merchandise

Expectations of a boost to the Chinese economy overall boosted prices of industrial commodities such as oil, copper and iron ore.

Chinese regulators on Monday extended some of the relief measures introduced in November to boost liquidity in the property sector.

Brent crude is struggling to break out of its 18-month low, rising 2.09% to $79.31 on the day. US crude rose 2.38% to $74.73 a barrel. Traders weighed supply cuts by the world’s largest oil exporter and the prospect of rising demand in the developing world in the second half of 2023 against a weak global economic outlook.

Gold prices hit a three-week high. Gold spot rose 0.35% to $1,931.75 an ounce.

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