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Stock markets await clues from inflation data

US and European equity markets finished the first session of the week slightly lower as traders shifted their attention to macroeconomic data later in the week. They hope to gain insight from the data into when the world’s largest central banks will begin cutting interest rates. Personal Consumption Expenditures (PCE) - the Federal Reserve’s (Fed) preferred gauge of inflation - are due out of the US on Thursday. European countries will also release inflation data later in the week. Japan’s inflation released early Tuesday came in slightly higher than expected.

Shane Strowmatt, LGT
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Stock indices in New York backed down from last week’s artificial intelligence-drive race to new highs. The Dow Jones Industrial lost 0.2% and the S&P 500 fell 0.4%. The Nasdaq-100 finished Monday’s session marginally lower. In Europe, major markets mostly traded lower with the Europe Stoxx 50 losing 0.2% on Monday.

The mild losses on markets reflect traders’ concerns about the upcoming Personal Consumption Expenditures data, due on Thursday. Markets have already essentially ruled out the possibility of an interest rate cut at the Fed’s next meeting in March and even a cut in May is considered unlikely, according to the CME FedWatch Tool. A strong PCE reading on Thursday could push back expectations for a first Fed rate cut even further.

Japan kicked off the week of inflation data by releasing its Consumer Price Index (CPI) in the early morning hours Tuesday. Core CPI - which excludes food and energy prices - increased 2% in January when compared with the same month a year earlier. That figure is down from the previous month’s 2.3% but just above a market expectation of 1.9%. Headline CPI was up 2.2% on the year in January, falling from 2.6% in December. The Nikkei 225 closed up 0.2%

Elsewhere in the Asia-Pacific region, stock markets were mixed on Tuesday. In South Korea, the Kospi dropped 0.9% and Australia’s S&P/ASX 200 gained 0.1%. Hong Kong's Hang Seng Index lost 0.1%, while the Shanghai Composite jumped 0.8%.

In energy markets there were sizable moves in oil prices to start the week as traders were concerned about possible shipping disruptions. At the weekend, Yemen’s Houthi rebels nearly hit a US tanker in the Red Sea while they managed to strike another ship just last week, which had to be abandoned. West Texas Intermediate was trading under USD 78 and Brent just below USD 82 per barrel.

Corporate news in focus: Quarterly figures from Alcon, Munich Re, PSP Swiss Property, Puma, SIG, Straumann Group.

Economic data in focus: GfK Consumer Climate Germany, US durable goods orders, Conference Board Consumer Confidence Index.


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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

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