Mar 12 2024: Global stocks made slight gains on Tuesday as investors anticipated the release of U.S. inflation data, which could provide insights into the Federal Reserve’s potential interest rate adjustments. Meanwhile, the yen experienced a decline after Japanese officials tempered expectations of an immediate policy shift by the central bank.
Gold remained just below record highs, while the dollar saw a slight increase as traders awaited the U.S. consumer price index later in the day.
Encouraged by gains on Wall Street overnight and a rise in technology stocks in Asia, the MSCI All-World index edged up by 0.1%.
Investors are factoring in the possibility of at least three interest rate cuts by the Fed this year, with expectations for the first cut likely to begin in June. Analysts noted that Tuesday’s CPI data could potentially alter these expectations.
According to Deutsche Bank strategist Jim Reid, they anticipated a monthly rise of 0.4% in CPI, maintaining the annual rate at 3.1%, while the core rate is expected to have increased by 0.3%.
U.S. stock index futures indicated gains of 0.2-0.4%, suggesting a positive start later in the day, while in Europe, the STOXX 600 rose by 0.4%.
In a recent Reuters poll, a stronger majority of economists expect the Fed to commence rate cuts in June. The survey also indicated that more respondents anticipated a signal of fewer cuts overall this year at the March meeting of Fed policymakers, rather than more.
While the yield on 10-year Treasury notes eased slightly to 4.094%, the dollar index, which measures the U.S. currency against six others, rose by 0.1% to 102.9.
In the currency market, the yen weakened against the dollar following a slightly pessimistic assessment of the country’s economy by Bank of Japan Governor Kazuo Ueda. This dampened expectations of the central bank’s immediate abandonment of its negative interest rate policy, resulting in the yen’s decline and allowing the dollar to rise by 0.3% to 147.34 yen.
There is growing speculation among BOJ policymakers about ending negative interest rates this month, according to sources familiar with the central bank’s thinking.
Meanwhile, sterling eased by 0.3% to $1.278 after data revealed that UK wage growth cooled more than expected last month, adding pressure on the Bank of England to consider rate cuts sooner rather than later.
Elsewhere, Chinese stocks saw an increase, with Hong Kong’s Hang Seng Index up by 2.6%, led by the tech sector, while the blue-chip CSI300 index inched up by 0.23%.
Spot gold dipped by 0.3% to $2,176 an ounce, remaining close to last week’s record high at $2,194.99.
