Stocks hold at record highs as traders bet on rate cuts
By Naomi Rovnick and Stella Qiu
LONDON SYDNEY (Reuters) -Global shares drifted around record highs on Friday after U.S. and euro zone inflation data and weak global factory surveys kept hopes of central bank rate cuts in coming months intact.
With markets dominated by bets of both the U.S. Federal Reserve and the European Central Bank lowering borrowing costs in June, Europe's Stoxx 600 index rose 0.2% in early dealings, extending an all-time record.
Futures trading implied Wall Street's S&P 500 stock index, which also hit a record in the previous session, would edge lower later in the day while contracts on the technology-heavy Nasdaq 100 were seen easing 0.2%.
In Asia, Japan's Nikkei index jumped 1.9% to hit a fresh all-time high, extending a surge of 7.9% the previous month when it breached levels last seen in 1989.
Markets see a 76% probability that the Fed will start cutting interest rates in June and around a 60% chance of the ECB dropping its deposit rate the same month, even without a recession expected.
«The period of double-digit inflation from which we are emerging is well and truly over,» said Florian Ielpo, head of macro at Lombard Odier in Geneva.
U.S. personal consumer expenditures (PCE), the Fed's preferred gauge for inflation, rose 2.4% in January, the smallest annual increase in three years, data on Thursday showed.
Inflation across the 20-nation euro zone also eased to 2.6% in February from 2.8% a month earlier, according to Eurostat figures published on Friday.
But a further softening of economic growth could change the market narrative if investors start to worry about companies' earnings, said Jon Mawby, co-head of absolute and total return credit at Pictet Asset Management.
Economists polled
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