News

Big day for US data, world markets mixed in early trade

Fed to announce rates decision, CPI data ahead.

European stocks rebounded after days of political upheaval in France, with traders positioning for the potential disruption from US inflation data landing just hours ahead of Federal Reserve’s interest rate decision.

Banks led a 0.4% advance in the Stoxx 600, ending three sessions of losses. The euro held steady. Treasuries edged higher after rising on a solid $39 billion sale, while French 10-year bonds were little changed after four days of losses.

The dollar stood firm following four days of gains, while US stock futures are set to extend their record-setting rally.

Volatility in European assets appears to be subsiding after investors were caught unprepared for the French far-right’s gains in the weekend’s European Parliament elections. The calm may be short-lived, however, with a double-whammy of US CPI data and Fed rate forecasts potentially upending markets.

“Today is a big day in terms of economic data and Fed announcement,” said Ipek Ozkardeskaya, an analyst at Swissquote Bank. “It could determine the global market mood for the rest of the month, and a good part of summer.”

While policymakers are widely expected to hold borrowing costs at a two-decade high, there’s less certainty on officials’ quarterly rate projections. Bloomberg Economics expects that the so-called dot plot will indicate two 25-basis-point cuts this year, compared with three in the March version.

“On the dot-plot, how does that evolve, will it be one or two cuts?,” Grace Peters, head of investment strategy for Europe, Middle East and Africa at JPMorgan Private Bank, said on Bloomberg TV. “If it’s two, I think the market reaction can be quite positive and would support new highs in the S&P 500,” she said.

Wednesday’s biggest single stock moves include a 16% surge in London-listed Rentokil Initial Plc, following news that activist investor Trian Fund Management LP has amassed a significant stake in the pest-control company.

Oracle Corp., meanwhile, is set to open at a record high after surging in premarket trade. The software company reported better-than-expected bookings and announced partnership deals with rivals.

In Asia, Hong Kong’s benchmark closed lower more than 1%. China’s consumer price gains held above zero in May while factory-gate prices remained stuck in deflation, fueling concerns over persistently weak demand.

Oil extended gains after industry data pointed to shrinking US crude stockpiles, shrugging of forecasts from the International Energy Agency that markets are facing a major surplus this decade.

Key events this week:

US CPI, Fed rate decision, Wednesday
G-7 leaders summit, June 13-15
Eurozone industrial production, Thursday
US PPI, initial jobless claims, Thursday
Tesla annual meeting, Thursday
New York Fed President John Williams moderates a discussion with Treasury Secretary Janet Yellen, Thursday
Bank of Japan’s monetary policy decision, Friday
Chicago Fed President Austan Goolsbee speaks, Friday
US University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks