U.S. stocks opened higher on Tuesday, while European stocks were mostly lower, as markets remained in a holding pattern ahead of this week's U.S. inflation data, euro zone central bank meetings and corporate earnings.
Investors will be keeping an eye on Wednesday's release of U.S. consumer price data after the last two inflation reports were higher than expected, delaying hopes for a rate cut. The European Central Bank will then meet on Thursday to discuss interest rate policy in the euro area.
“Market participants are hopeful that the CPI data will calm lingering inflation fears and put the Fed on track to cut interest rates in June,” said Patrick J. O'Hare, an analyst at Briefing.com. Ta.
He said news about inflation “could shake up market sentiment, as could earnings guidance coming out of the first-quarter earnings reporting period.”
All U.S. indexes opened higher, with the tech-heavy Nasdaq leading the way. In Europe, Paris and Frankfurt fell, while London rose slightly, rising 1.5% after energy giant BP released an upbeat quarterly report.
European markets remain more focused on the outlook for interest rates than U.S. markets, as they lack the large-cap tech stocks that have supported U.S. stock indexes.
“European investors continue to price in the prospect that U.S. interest rates will remain high for an extended period of time,” said Trade Nation analyst David Morrison.
With U.S. consumer prices rising in January and February, the job market remaining strong and the U.S. economy in excellent health, traders are regularly lowering their expectations for monetary stimulus this year. Some are considering not cutting rates by 2025.
“Earlier this year, the market was pricing in six 25 basis point rate cuts, and now it's closer to two or three basis points,” Trade Nation's Morrison said. “Some FOMC members feel that it is too early to consider rate cuts, given the recent slowdown in inflation and the release of solid economic data.”
The ECB is almost certain to keep interest rates on hold at this meeting, but analysts are wondering whether European banks will wait for U.S. banks to cut rates first or whether they will be spurred into action by Europe's weak economy. Opinions are divided.
In Asia, a weaker yen that supports exports has boosted Tokyo markets, but the weaker yen is approaching the 152 yen level to the dollar that many believe could prompt intervention by Japanese authorities.
JPMorgan, Wells Fargo and Citigroup were the first to rise, with the start of US earnings season over the weekend. Next week will include reports from European luxury brand groups such as LVMH, Richemont, Burberry and Essilor Luxottica.
– Main figures around 1330 GMT –
New York – Dow: up 0.1% to 38,934.42 points
New York – S&P 500: up 0.3% to 5,218.93
New York-Nasdaq Composite: up 0.6% to 16,345.01
London – FTSE 100: up 0.2% to 7,958.28
Paris – CAC 40: down 0.4 to 8,087.84
Frankfurt – DAX: down 0.6% to 18,201.81
Euro STOXX 50: down 0.4% to 5,026.85
Tokyo – Nikkei Stock Average: 39,773.13 (closing price), up 1.1%
Hong Kong Hang Seng Index: 16,828.07 (closing price), up 0.6%
Shanghai – Overall: 3,048.54 (close price) up 0.1%
Dollar/JPY: down to 151.73 yen from 151.82 yen on Monday
EUR/USD: increased from $1.0859 to $1.0884
GBP/USD: up from $1.2655 to $1.2708
EUR/GBP: down from 85.80p to 85.66p
North Sea Brent crude oil: unchanged at $90.41 per barrel
West Texas Intermediate: down 0.1% to $86.35 per barrel
Birds-GV/CW
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