Global stocks slip as traders wait for key US inflation data, due amid a surge in gas prices

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  • Global stocks slipped Friday ahead of key inflation data out of the US, which could influence the Fed.
  • Economists expect inflation to have flatlined at 8.3%, but a surge in gas prices means there’s some uncertainty.
  • If the CPI reading is higher than seen, that could spark volatility in stocks, which fell sharply Thursday.

US stock futures trod water Friday, and European and Asian equities fell, as traders waited for crucial US inflation data that will show whether prices in the world’s biggest economy are finally cooling.

Futures on the S&P 500 were broadly flat, Dow Jones futures were down 0.09%, and Nasdaq 100 futures were up 0.3% as of 5.25 a.m. ET. Meanwhile, the MSCI All-World index of global equities fell 0.45%.

The cautious trading in Wall Street futures follows a sharp drop in major US stock indices Thursday, which saw the S&P 500 shed 2.38%. Investors were reacting to the European Central Bank’s announcement it will finally hike interest rates, and were bracing for Friday’s inflation data.

The latest consumer price index inflation print for May is due at 8.30 a.m. ET Friday from the Bureau of Economic Analysis.

Economists polled by Bloomberg expect the headline year-on-year figure to hold steady from April at 8.3% — still a red-hot pace, but down from March’s 41-year high reading of 8.5%. On a month-on-month basis, CPI is expected to hit 0.7%, from 0.3% a month earlier.

Core inflation, which strips out volatile food and energy prices, is expected to fall 0.3 percentage points to 5.9% year-on-year. Month-on-month, core CPI inflation is seen as cooling to 0.5% from 0.6%.

However, the recent surge in prices of crude oil and US gas has analysts worried the headline number could come in higher than predicted.

If it does top expectations, that could spook already-nervous markets, as it could force the Federal Reserve to hike interest rates harder to get a grip on price rises.

“The headline month-to-month May CPI print today will look awful, thanks to the latest surge in gasoline prices, and, probably, continued upward pressure on grocery store food prices,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a note.

“The core, however, probably will be more encouraging,” he added.

European stocks dropped Friday after the sell-off on Wall Street and as investors awaited the inflation data, with the continent-wide Stoxx 600 down 1.3% in morning trading. The step lower comes after the ECB pledged to hike interest rates at its next meeting.

Asian stocks broadly fell overnight, with Japan’s Nikkei 225 finishing 1.49% in the red, but China’s CSI 300 rising 1.52%.

US bond yields, which move inversely to prices, slipped Friday after a relatively sharp climb this week. The yield on the key 10-year US Treasury note fell 2.1 basis points to 3.025, having started the week at around 2.95%.

Elsewhere in markets, oil prices rose slightly, continuing a recent trend on the back of the EU’s move to ban Russian imports and a belief that the OPEC+ group of producers’ plans to increase output will not be enough to cool the market.

Brent crude was up 0.24% to $123.36 a barrel, around its highest level since 2012, bar the spike to around $140 shortly after Russia invaded Ukraine in late February.

WTI crude, the US benchmark, was 0.21% higher at $121.81 a barrel.

Read more: A portfolio manager at billionaire investor Mario Gabelli’s $41 billion firm says to buy these 27 stocks that have the pricing power to deliver returns as inflation soars