Stocks gain as inflation data is in focus

Stocks edged higher as markets reopened in Europe and the US with traders looking to inflation prints and central bank speakers for hints on the timing of interest-rate cuts. 

Europe’s Stoxx 600 was little changed, on track for a 3.5% gain in May, while contracts on US shares climbed 0.3%. The 10-year Treasury yield slipped two basis points and the dollar was steady. Brent crude was also flat after two days of gains even as tensions in the Middle East ratcheted higher following the death of an Egyptian soldier during a clash with Israeli troops.

Consumer inflation expectations in the euro zone ticked lower in April, while the Federal Reserve’s favorite measure of underlying inflation is seen showing modest relief when it lands on Friday. The ECB’s Klaas Knot speaks Tuesday, with Lisa Cook and Neel Kashkari among Fed speakers due this week. 

“We are very much on the inflation data watch for now,” said Marija Veitmane, senior multi-asset strategist at State Street Global Markets. “Stocks and risk will continue to be supported, but I don’t see change of leadership nor a broadening of the performance. Large-cap growth stocks will be leading.”

ECB policymakers next meet on rates on June 6. On Monday, France’s Francois Villeroy de Galhau said the ECB shouldn’t exclude cutting rates in both June and July, though hawkish policymakers including Executive Board member Isabel Schnabel recently came out in opposition to back-to-back moves.

As traders return from the long weekend they’ll also be alert for problems connected with the switch to “T+1” rule — whereby US equities will settle in one day rather than two. 

There are worries about potential teething issues, including that international investors may struggle to source dollars on time, global funds will move at different speeds to their assets, and everyone will have less time to fix errors.

Elsewhere, Bitcoin fell as traders monitored transfers by wallets belonging to the failed Mt. Gox exchange, whose administrators have been stepping up efforts to return a $9 billion hoard of the largest digital asset to creditors.

 Some key events this week: 

• IMF holds discussions with Ukrainian authorities to review economic policies as the country seeks to unlock next tranche of $2.2 billion in aid, Monday
• Cleveland Fed President Loretta Mester speaks at BOJ event in Tokyo; Minneapolis Fed President Neel Kashkari and ECB Governing Council member Klaas Knot address Barclays-CEPR International Monetary Policy forum, Tuesday
• South African election, the most significant since the end of apartheid, Wednesday
• Fed releases Beige Book economic survey, Wednesday
• South Africa rate decision, US initial jobless claims, GDP, wholesale inventories, Thursday
• New York Fed President John Williams speaks at the Economic Club of New York, Thursday
• GDP data published for Canada, euro zone, Turkey, Friday
• Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 was little changed as of 9:20 a.m. London time
• S&P 500 futures rose 0.3%
• Nasdaq 100 futures rose 0.5%
• Futures on the Dow Jones Industrial Average were little changed
• The MSCI Asia Pacific Index was little changed
• The MSCI Emerging Markets Index was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.1% to $1.0875
• The Japanese yen was little changed at 156.90 per dollar
• The offshore yuan was little changed at 7.2640 per dollar
• The British pound was little changed at $1.2771

Cryptocurrencies

• Bitcoin fell 2.5% to $67,821.07
• Ether fell 0.9% to $3,855.48

Bonds

• The yield on 10-year Treasuries declined two basis points to 4.45%
• Germany’s 10-year yield was little changed at 2.55%
• Britain’s 10-year yield declined four basis points to 4.22%

Commodities

• Brent crude rose 0.2% to $83.27 a barrel
• Spot gold fell 0.4% to $2,340.71 an ounce

This story was produced with the assistance of Bloomberg Automation.