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The FTSE 100 closed 1.66pc higher Monday, driven by supermarkets and retailers. Tesco, Sainsbury’s, Kingfisher – owner of B&Q – and Ocado all rose by more than 5pc. Meanwhile, housebuilder Berkeley Group rose by 4.9pc to 3,716p.
Asian equities extended the global rally in risk assets amid speculation Tuesday’s US consumer price data will support bets that inflation there is near peaking. Stocks rose in Japan, Australia and Hong Kong. US futures were steady after the S&P 500 completed its best four-day surge since June on Monday following robust pre-order data for Apple Inc.’s iPhone 14 Pro Max. Asian stocks rose on Tuesday as traders in Korea returned from holidays in a mood to catch up on a global bounce, while other markets held steady ahead of U.S. inflation data that will offer a crucial guide to the interest rate outlook.
Benchmark gas prices in Europe fell a further 9pc to their lowest level in a month yesterday as the EU drew up proposals to avoid a winter energy crisis, including measures to curb power demand. Gas prices slipped to €192 per megawatt hour, down more than 40pc on the highs reached in August.
Wall Street indexes posted a fourth straight session of gains overnight, while the U.S. dollar retreated further from milestone highs – partly on hopes that the prices data, due at 1230 GMT, might offer another signal that inflation has peaked.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6%, led by a 2% jump for South Korea’s Kospi. Japan’s Nikkei tacked on 0.3%.
S&P 500 futures were flat, as were European futures. Easing oil prices have markets optimistic that headline inflation will steady or slow in the United States, and that this can reduce the need for future interest rate hikes.
Analysts warn that core inflation is likely to march on, however, and that the near-term rate implications are unclear.
Interest rate futures imply a 90% chance that the Federal Reserve lifts its benchmark interest rate by 75 basis points at next week’s policy meeting – a position that is perhaps most vulnerable to a downside CPI surprise.
Traders in Asia hit pause on four days of selling dollars and buying stocks as focus turns on U.S. inflation figures set for release at 1230 GMT. Today’s data will frame the Fed’s policy meeting next week and set the tone for weeks to come.
British employment and a potentially ugly German sentiment survey are due ahead of the U.S. data, but are likely to be overshadowed. Consumers’ inflation expectations are falling, Monday’s New York Fed survey showed, and markets are hoping for another signal that the inflation peak is firmly in the rear-view mirror.
Economists’ expectations are for a slowdown in headline CPI, thanks to oil and a host of other commodity prices backing down from peaks, but for core prices to stay sticky. Economists and the market also reckon the Fed is likely to hike by 75 basis points on Sept. 21, so perhaps the data’s largest impact may be on moves beyond that.
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