Stocks climb, dollar dips as focus shifts to US inflation data
NEW YORK —- Global stock indexes rose on Monday while the U.S. dollar edged lower, with investors awaiting this week’s U.S. inflation data that is expected to be key for the outlook for U.S interest rates.
While the U.S. consumer prices report will likely take center stage, U.S. producer price data is also due this week, along with final reports on European inflation that should reinforce expectations for a June rate cut from the European Central Bank.
Reports on Chinese retail sales and industrial output are expected as well.
This week brings comments from a host of Federal Reserve speakers, including Fed Chair Jerome Powell.
Investors have been focused on inflation as they weigh how soon the U.S. central bank is likely to cut rates.
Economists polled by Reuters expect the closely watched core CPI to rise by 0.3 per cent in the month, down from 0.4 per cent in March, for an annual gain of 3.6 per cent, down from 3.8 per cent.
Investors need to “get some level of comfort that inflation is not going back up, and potentially going down, to give the Fed cover for at least one or maybe two cuts before the end of the year,” said Thomas Hayes, chairman at Great Hill Capital LLC.
The Dow Jones Industrial Average rose 98.29 points, or 0.25 per cent, to 39,611.13, the S&P 500 gained 5.65 points, or 0.11 per cent, to 5,228.33 and the Nasdaq Composite gained 30.04 points, or 0.18 per cent, to 16,370.91.
The first-quarter U.S. earnings season is winding down, but investors will see reports this week from some big U.S. retailers including Walmart.
MSCI’s gauge of stocks across the globe rose 1.54 points, or 0.20 per cent, to 783.60, and the STOXX 600 index was nearly flat.
Earlier in the day, Chinese stocks eased. China’s finance ministry said on Monday it will start the long-awaited sales of 1 trillion yuan ($138.23 billion) of long-term treasury bonds that Beijing hopes will help stimulate key sectors of a flagging economy this week.
The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, fell 0.18 per cent to 105.14.
The relative outperformance of the U.S. economy continues to underpin the dollar, while only the threat of Japanese intervention is stopping it from re-testing the 160 yen barrier.
The Bank of Japan on Monday sent a hawkish signal to markets by cutting the amount of Japanese government bonds it offered to buy in a regular operation.
Against the Japanese yen , the dollar was up 0.1 per cent at 155.90, after touching its highest level since May 2 at 155.965, and the euro was up 0.3 per cent at $1.0803.
Benchmark 10-year note yields were last down 3 basis points at 4.615 per cent.
U.S. crude gained 1.11 per cent to $79.13 a barrel and Brent rose to $83.51 per barrel, up 0.87 per cent on the day. Spot gold lost 0.77 per cent to $2,342.20 an ounce.