Morning Bid: Power of Powell lifts stocks ahead of US CPI

By Thomson Reuters May 14, 2024 | 11:34 PM

A look at the day ahead in European and global markets from Ankur Banerjee

European bourses are poised to keep the rally going ahead of the always important U.S. CPI data after comments from Fed Chair Jerome Powell reassured investors that the next move from the U.S. central bank was unlikely to be a hike.

Powell called Tuesday’s higher-than-expected producer price report ‘mixed’ rather than ‘hot’ because prior data was revised lower.

Though Powell’s comments largely restated those made at his press conference after the Fed’s last meeting, it was enough for stocks to surge, with Asian shares at their highest in 15 months and Nasdaq closing at a record high.

The pan-European STOXX 600 also closed at a record high on Tuesday and futures indicated the index was set for a higher open.

Traders are now pinning their hopes on the Fed starting its easing cycle in September although it will depend on the inflation report, which is expected to show CPI rose 0.3% month-on-month in April, down from a 0.4% growth the previous month, according to a Reuters poll.

Meanwhile, earnings season continues with luxury company Burberry and Dutch bank ABN Amro leading the lineup for the day.

Meme stocks are soaring like it’s 2021, with retail investor darlings GameStop and AMC surging this week, tripling GameStop’s market capitalisation to about $18 billion.

Robinhood hit $5 billion in equities trading on Tuesday, its CEO Vlad Tenev tweeted, underscoring the demand and perhaps the return of the meme stocks mania.

All it took were some social media posts, which did not mention any company names, from “Roaring Kitty” Keith Gill, credited with sparking the so-called Reddit rally in January 2021 with bullish calls on GameStop.

Key developments that could influence markets on Wednesday:

Economic events: France April CPI data; Euro zone Q1 flash GDP

Earnings: ABN Amro Bank, Allianz, Burberry and Merck KGaA

(Editing by Muralikumar Anantharaman)