Stocks gain as inflation data is in focus
investmentnews.comStocks edged higher as markets reopened in Europe and the US with traders looking to inflation prints and central bank speakers for hints on the timing of interest-rate cuts.
Europe’s Stoxx 600 was little changed, on track for a 3.5% gain in May, while contracts on US shares climbed 0.3%. The 10-year Treasury yield slipped two basis points and the dollar was steady. Brent crude was also flat after two days of gains even as tensions in the Middle East ratcheted higher following the death of an Egyptian soldier during a clash with Israeli troops.
Consumer inflation expectations in the euro zone ticked lower in April, while the Federal Reserve’s favorite measure of underlying inflation is seen showing modest relief when it lands on Friday. The ECB’s Klaas Knot speaks Tuesday, with Lisa Cook and Neel Kashkari among Fed speakers due this week.
“We are very much on the inflation data watch for now,” said Marija Veitmane, senior multi-asset strategist at State Street Global Markets. “Stocks and risk will continue to be supported, but I don’t see change of leadership nor a broadening of the performance. Large-cap growth stocks will be leading.”
ECB policymakers next meet on rates on June 6. On Monday, France’s Francois Villeroy de Galhau said the ECB shouldn’t exclude cutting rates in both June and July, though hawkish policymakers including Executive Board member Isabel Schnabel recently came out in opposition to back-to-back moves.
As traders return from the long weekend they’ll also be alert for problems connected with the switch to “T+1” rule — whereby US equities will settle in one day rather than two.
There are worries about potential teething issues, including that international investors may struggle to source dollars
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