Shares rise ahead of US inflation data, oil peaks before Omicron

  • S&P futures up 0.11%, FTSE up 0.68% at 1-year high
  • The oil reaches 2-month highs, dollar falls, breaks in bond sales
  • US inflation data at 1330 GMT set at 7% y / y
  • Cooling price increases in China fan efforts on easing in politics

LONDON, Jan. 12 (Reuters) – Futures on US stock indices rose ahead of US inflation data on Wednesday, building on stock market gains after testimony from US Federal Reserve Chairman Jerome Powell last season, while oil reached highs ahead of Omicron.

Powell told a congressional hearing about his confirmation for another term that the economy could withstand the COVID-19 wave and was ready for tighter monetary policy, but said it could take several months to make a decision to reduce the Fed’s $ 9 trillion balance sheet. . read more

The lack of a faster schedule for interest rate increases provided support for more risky assets.

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S&P futures rose 0.11%, indicating a stronger opening on Wall Street, after the Nasdaq (.IXIC) and S&P 500 (.SPX) recorded their best sessions in 2022 on Tuesday.

Oil is trading at its highest level since the highly contagious Omicron COVID-19 variant appeared at the end of November, as it has not affected fuel demand as previous variants did.

Brent oil futures rose 0.48% to $ 84.13 per barrel and US crude oil futures rose 0.66% to $ 81.76 per barrel.

“Omicron is yesterday’s story now,” said Luca Paolini, chief strategist at Pictet Asset Management.

“The market is not moving on Omicron, but on earnings, Fed and financial data.”

MSCI World Shares (.MIWD00000PUS) rose 0.43% to one week high. European equities (.STOXXE) rose 0.4% and the UK’s FTSE 100 (.FTSE) rose 0.68% to a year high.

Inflation data in the US for December is expected at 1330 GMT and is expected to reach a nearly four-decade high of 7% year-on-year, with a core inflation forecast of 5.4%, according to a Reuters survey.

US CPI is expected to reach 7%

“If we see core inflation below 5%, we will see the dollar sell out in no time,” said Giles Coghlan, chief currency analyst at HYCM.

The dollar has fallen through its 200-day moving average against a basket of currencies, reaching its lowest in almost two months at 95,533.

It also hit a low of 2022 against the euro at $ 1.1378 and was stable at 115.41 yen.

Although Fed Fund futures forecast almost four rate hikes this year, a seismic change from a few months ago, long-term interest rate expectations have not changed sharply.

US interest rates will peak at 1.5% by the third quarter of 2024, far lower than previous US interest rate tightening cycles.

“It seems to be a fait acpli that the Fed will raise interest rates quickly, even if inflation falls slightly below expectations,” Commerzbank analysts said in a customer note.

“In the worst case, the repeal will not take place in March, but in May or June.”

Sterling reached two-month highs before easing to $ 1.3632, as investors watch the UK overcome a wave of COVID-19 cases led by Omicron and have priced in an almost 80% chance of a Bank of England rate hike in February.

Benchmark 10-year government interest rates were stable at 1.7446% and have retreated almost seven basis points from a nearly two-year high hit on Monday.

Germany’s 10-year interest rate fell to -0.045% after rising as high as -0.014% on Tuesday, approaching positive territory for the first time since May 2019. EUR / GVD

MSCI’s broadest index of Asia-Pacific equities outside Japan (.MIAPJ0000PUS) rose 1.6% to a one-and-a-half-month high, led by a 5% jump in technology stocks in Hong Kong (.HSTECH).

Japanese Nikkei (.N225) rose 1.9%.

In China, a weaker-than-expected reading of prices has drawn bets on easing. read more

Five-year Chinese government bond futures rose eight ticks to an 18-month high before trimming gains. Yuan gains were also limited.

Safe-haven gold fell 0.30% to $ 1800.

Cryptocurrencies were stable with investors comforted by the fact that bitcoin’s support of $ 40,000 held this week. Bitcoin was traded at $ 42,923.

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Further reporting by Tom Westbrook in Sydney and Saikat Chatterjee, Dhara Ranasinghe and Sujata Rao in London; editing by Kim Coghill, Emelia Sithole-Matarise and Hugh Lawson

Our standards: Thomson Reuters Trust Principles.

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