Markets mostly rise ahead of US inflation data

LONDON: Wall Street and European stock markets mostly rose on Wednesday ahead of key US inflation data later this week while the yen recovered slightly from a 34-year low against the dollar.

The yen dropped to 151.97 to the dollar in Asian trading hours ater a top Bank of Japan official indicated that it would press ahead with a loose monetary policy ater last week’s first interest rate hike since 2007.

Thejapanesecurrencystrengthenedsomewhat to 151.36 in the European session on speculation that officials could step in to support the yen.

The weaker yen helped spur a rally in Tokyo’s benchmark Nikkei stocks index as exporters benefited, making it Asia’s best performer.

“Ater hiting its highest since 1990, the yen slackened a bit overnight on the comments but has not budged much and the market will need more,” said analyst Neil Wilson at trading firm Finalto.

“Usually in these situations the market will test how far Tokyo is prepared to let it go.”

Earlier in the day, BOJ board member Naoki Tamura said officials would not embark on a speedy programme of monetary tightening as they try to nurture an economic recovery while keeping a lid on inflation.

“The handling of monetary policy is extremely important from here on for slow but steady progress in normalisation to fold back the extraordinarily large-scale monetary easing,” he said, according to Bloomberg News.

Finance Minister Shunichi Suzuki told reporters the government was “monitoring market movements with a high sense of urgency” and “will take resolute action against excessive moves, without ruling out any options.”

Elsewhere, Wall Street’s main indices rebounded at the open, with investors eyeing Friday’s release of the Federal Reserve’s preferred gauge of inflation -- the personal consumption expenditures (PCE) index -- and the looming corporate earnings season.

Analysts expect the Fed to start cuting rates in June following hikes aimed at taming soaring consumer prices.

“Many investors are concerned that an uptick on Friday could upend dovish expectations,” said David Morrison, senior market analyst at Trade Nation.

The Frankfurt DAX was up in aternoon deals even as leading German economic institutes lowered the 2024 growth forecast for Europe’s top economy to 0.1 percent.

Paris was also higher but London fell. Hong Kong and Shanghai closed more than one percent lower.

Oil prices fell for a second day on Wednesday on surging U.S. stockpiles and signs the OPEC+ producer group is unlikely to change its output policy at a technical meeting next week.

Brent crude futures for May dropped 70 cents, or 0.8%, to $85.55 a barrel by 1258 GMT while the more actively traded June contract was down 61 cents, or 0.7%, at $85.02. The May contract expires on Thursday.

U.S. West Texas Intermediate (WTI) crude futures for May delivery fell 59 cents, or 0.7%, to $81.03. Both benchmarks had fallen by more than $1 in earlier trading.

Prices have retreated since climbing to their highest since October last week and remain about 3% above the average closing price in the first week of March.

A sharp rise in U.S. crude inventories and expectations for potential inaction by OPEC+ next week prompted further “unwinding” in oil prices as profit-taking accelerates ater the mid-march rally, said IG market strategist Jun Rong Yeap.

U.S. crude oil inventories rose by 9.3 million barrels in the week ended March 22, said market sources citing American Petroleum Institute figures on Tuesday. Distillate inventories rose by 531,000 barrels, but gasoline stocks dropped by 4.4 million barrels. Official government data will be published on Wednesday at 10:30 a.m. EDT (1430 GMT).

The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together known as OPEC+, are unlikely to make any oil output policy changes until a full ministerial gathering in June, three OPEC+ sources told Reuters ahead of next week’s meeting to review the market and members’ implementation of output cuts.

OPEC+ this month agreed to extend output cuts of about 2.2 million barrels per day (bpd) to the end of June, though Russia and Iraq have had to go to extra lengths to tackle over-production.

Those struggles have called into question the group’s ability to comply with cuts, with OPEC having exceeded its targets by 190,000 bpd in February, a Reuters survey showed.