Marketmind: Stocks hold fast in wait for inflation data

By Thomson Reuters Feb 26, 2024 | 11:33 PM

A look at the day ahead in European and global markets from Tom Westbrook

Stocks around the world have travelled great distances to record peaks in recent days, but turned sideways this week while investors and central bankers alike wait on inflation data that could alter the course for interest rates.

Figures on the French and German consumer mood are due later in the day, along with Eurozone money supply data and then U.S. numbers for durable goods sales, consumer confidence and home prices.

Those releases will be the appetiser ahead of Thursday’s main course, U.S. core prices data, but in the meantime investors are taking a breather after last week’s wave of AI-fuelled buying.

Japanese inflation turned somewhat sour in January, data on Tuesday showed. The 2% year-on-year rise was an upside surprise where traders had seen downside risks, and it lifted the yen slightly by keeping alive expectations for a rate rise in Japan as early as next month.

The Nikkei touched a new record peak, then retreated to flat. Other markets moved only modestly, save for cryptocurrencies where bitcoin and smaller rival ether rallied to two-year highs on new signs that big investors are circling.

The stock price of Houston’s Intuitive Machines went earthbound fast after the space explorer said communications with its Odysseus lander – lying on its side on the moon – would likely cease on Tuesday. The stock fell 35% on Monday, although it has more than doubled year-to-date as it brought the first U.S. spacecraft to the lunar surface following a five-decade absence.

Elsewhere, Kansas City Federal Reserve Bank President Jeffrey Schmid used a debut speech to join the chorus of global policymakers emphasising that they are in no hurry to cut rates, which along with recently released U.S. economic data has started to chasten bond markets.

Traders have already pushed out the likely timing of a first Federal Reserve easing from May to June. Futures imply a little more than three quarter-point cuts this year, compared with five at the start of the month.

A $42 billion Treasury auction is scheduled for Tuesday, on the heels of $127 billion in two-year and five-year notes auctioned on Monday.

U.S. President Joe Biden said he hopes to have a ceasefire in the Israel-Hamas conflict in Gaza start by next Monday as the warring parties appeared to close in on a deal. Sweden cleared the last hurdle to follow Finland in joining NATO.

Standard Chartered said it had suspended since last week new subscriptions by clients in China into offshore products via a quota-based channel. It cited commercial reasons.

That comes amid efforts by Beijing to stem capital outflows as a weaker yuan and a slowing economy drive savings abroad.

Key developments that could influence markets on Tuesday:

Economics: German, French consumer sentiment, French unemployment, Eurozone M3, U.S. durable goods, U.S. S&P house prices

Earnings: Abrdn, Munich Re, Puma, eBay, Lowe’s, Norwegian Cruise Line

Speeches: BoE’s Ramsden, ECB’s Thedeen

(By Tom Westbrook; Editing by Edmund Klamann)