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

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

• The Stoxx Europe 600 rose 0.4% as of 10:24 a.m. London time
• S&P 500 futures were little changed
• Nasdaq 100 futures were little changed
• Futures on the Dow Jones Industrial Average were little changed
• The MSCI Asia Pacific Index was little changed
• The MSCI Emerging Markets Index rose 0.4%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.1% to $1.0752
• The Japanese yen was little changed at 157.28 per dollar
• The offshore yuan was little changed at 7.2680 per dollar
• The British pound rose 0.1% to $1.2754

Cryptocurrencies

• Bitcoin rose 0.2% to $67,440.95
• Ether rose 0.9% to $3,518.24

Bonds

• The yield on 10-year Treasuries declined one basis point to 4.39%
• Germany’s 10-year yield declined two basis points to 2.60%
• Britain’s 10-year yield declined two basis points to 4.25%

Commodities

• Brent crude rose 1% to $82.77 a barrel
• Spot gold fell 0.1% to $2,314.64 an ounce

This story was produced with the assistance of Bloomberg Automation.