US inflation data boosts European stocks


Monday’s stock market opened higher because investors were looking forward to upcoming economic data that they thought would make it less important for the Federal Reserve to keep raising interest rates.

The regional European Stoxx 600 index was 0.6% higher at the session’s midpoint, approaching its best level in a year. The FTSE 100 in London rose 0.4%, approaching the record high it reached last week. The German Dax also increased by 0.4%.

Ahead of the New York open, contracts tracking Wall Street’s blue-chip S&P 500 and the tech-heavy Nasdaq 100 recovered early losses to trade 0.3% and 0.6%, respectively. US markets had their largest five-day fall in two months last week.

Consumer prices are estimated to have increased by 6.2% in January, down from 6.5% in December, according to Bloomberg’s compilation of economist projections. This would be the smallest annual decline in the inflation rate since September.

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Francesco Pesole, a forex strategist at ING, stated that such a number would likely embolden US Federal Reserve policymakers who wish to hike interest rates more aggressively. This would enhance the likelihood of a quarter-point rate increase in May. Investors anticipate a move of similar magnitude at the March meeting of the US central bank.

“January data in the United States should be strong across the board, partly due to vastly improved weather conditions compared to December,” said Pesole. Recent employment data show that hiring has gone up a lot, which is also a sign of rising demand.

Since figures released in early February revealed that the United States added more than 500,000 jobs in the first month of the year, which was about three times the number anticipated, US markets have plummeted and government bond yields have risen. Analysts at JPMorgan say that after a hopeful start to 2023, the market has become “substantially more pessimistic.”

The two-year Treasury yield increased 0.03 percentage points to 4.54 percent on Monday, its highest level since late November. The yield on the 10-year Treasury bill was unchanged at 3.74 percent.

A gauge of the dollar’s strength versus a basket of six other currencies slipped 0.1 percent, reversing earlier gains. As markets digested the probable choice of scholar Kazuo Ueda as the next governor of the Bank of Japan, the yen fell 0.8% against the dollar to 132.46.

Brent crude, the international oil standard, dipped 0.4 percent to $86.07 a barrel, having surged just over 8 percent the previous week. US benchmark West Texas Intermediate lost 0.3% to $79.46 a barrel.

In Asia, Hong Kong’s Hang Seng index decreased by 0.1%, Japan’s Topix fell by 0.5%, and South Korea’s Kospi sank by 0.7%. China’s CSI 300 index increased by 0.9%.

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