Global Markets: Stocks steady as U.S. data keeps door open to September rate cut

Unity Software

28/06/2024 14:02

(Updated at 1250 GMT)
    By Huw Jones
       LONDON, June 28 (Reuters) - Global shares were steady on
Friday after data showed that U.S. inflation was flat in May,
helping to bolster investor hopes that the Federal Reserve will
begin cutting interest rates in September.
    S&P 500 futures  ESc1  and Nasdaq futures  NQc1  were firmer
ahead of the opening bell on Wall Street.
    The Fed's preferred inflation measure, the personal
consumption expenditures (PCE) index, showed that annual growth
in prices was 2.6% in May, as economists had expected, down from
2.7% in April.
    The figures will come as a relief to the Fed, though still
likely not be enough on their own to spur a cut in rates, said
Michael Brown, senior strategist at Pepperstone.
    "Should inflation continue to behave itself, and incoming
data fall in line with the Federal Open Market Committee's
forecasts, through the summer, the first 25 basis point cut
remains on the cards as soon as September," Brown said.
    Meanwhile, the yen's slide to a 38-year low fuelled
expectations of intervention by the Japanese authorities to stem
the weakness after a new foreign exchange diplomat was
appointed.
    Oil prices  LCOc1  were on track for a third straight weekly
jump on hopes of benign inflation figures to strengthen the
Fed's hand to lower borrowing costs.
    On the last trading day of the first half of the year,
stocks hovered near recent record highs. The AI boom on Wall
Street has helped the S&P 500 index rocket nearly 15% over the
past six months, with hefty gains in Europe and Asia, too.  
    However, worries about the outcome of the two-stage French
parliamentary elections that start on Sunday pushed the risk
premium on French government bonds over German bonds to its
widest since the euro zone debt crisis in 2012.
    The political uncertainty in France, where the far right is
leading, put the euro  EUR=EBS  on course for its biggest
monthly fall since January.
    The MSCI All Country Stock Index  .MIWD00000PUS  was firmer
at 804 points, near its June 20 lifetime high of 807.17, and up
about 10.5% for the year.
    In Europe, the STOXX index  .STOXX  of 600 companies was
little changed, cementing its 7% gain for the year, though down
this month as French political uncertainty weighs.
    Eren Osman, wealth management director at Arbuthnot Latham,
said the stock market advance underpinned by tech majors and AI
shares should continue to drive stocks into the second half.
    "What we see is just a very clear narrative that the
investment in that space is not going to slow down any time in
the near term, so to bet against that as a theme and likely
strong equity market performance is probably not a wise move,"
Osman said.
    
    
    
    FRAGMENTATION
    There was a muted response from the dollar and U.S. stock
index futures to the U.S. presidential debate in which Democrat
President Joe Biden stumble at times in a head-to-head with
Republican rival Donald Trump ahead of the November election.
    "We see a potential Trump administration as more positive
for the dollar, both via looser fiscal policy and also via a
more aggressive trade/tariff environment," ING analysts said
after the debate.
    HSBC economist Paul Bloxham said commodity markets face
greater fragmentation and supply disruptions if Trump wins in
November because that would be expected to prompt a rise in
trade protectionism.
  
  
    
    MSCI's broadest index of Asia-Pacific shares  .MIAPJ0000PUS 
rose 0.2% and was on track to gain more than 3% for the month -
its best performance since February.
    Chinese markets, meanwhile, reversed early losses to trade
higher, with China's benchmark CSI300  .CSI300  last up 0.2% and
Hong Kong's Hang Seng Index  .HSI  up 0.56%. Investors had been
concerned that Biden and Trump could tip a harder stance on
China during their debate.
    In currency markets, the dollar was heading for a monthly
gain of nearly 1.4% against a basket of currencies  =USD .
    The yen  JPY=EBS  tumbled to a trough of 161.27 per dollar,
its weakest since 1986, and was last trading at 160.555.
    The Japanese currency has fallen 2.3% this month and more
than 12% this year against a resilient dollar and continues to
be hammered by stark interest rate differentials between the
U.S. and Japan.
    The yen's weakness, meanwhile, has been a boon for the
Nikkei  .N225 , which was last up 0.6% and heading towards a
monthly gain of about 3%.
    In commodity markets, gold  XAU=  was a touch firmer
at$2,336 an ounce.  GOL/ 
    Brent crude oil futures  LCOc1  rose 0.4% to $86.77 a barrel
while U.S. West Texas Intermediate crude futures  CLc1  gained
0.38% to $82.05.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates YTD    http://tmsnrt.rs/2egbfVh
Global asset performance    http://tmsnrt.rs/2yaDPgn
Asian stock markets    https://tmsnrt.rs/2zpUAr4
On a tear    https://tmsnrt.rs/4cjWmKq
STOXX 600 in June over the years    https://tmsnrt.rs/3XJ0KOp
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Huw Jones in London
Additional reporting by Rae Wee in Singapore and Stella Qiu in
Sydney
Editing by Kim Coghill, Jacqueline Wong and David Goodman
)
 ((Rae.Wee@thomsonreuters.com;))
 
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