(Bloomberg) — Stocks settled into a holding pattern Thursday ahead of US inflation data that may provide clues on the Federal Reserve’s policy path.
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The Stoxx 600 index and S&P 500 futures traded flat, after the main US equity gauge hit its 44th record this year led by the big tech the previous session. Treasuries were steady, while oil gained as traders watched for an Israeli response to Iran’s missile attack. The Bloomberg Dollar Spot Index and the euro were little changed.
US consumer price data is expected to show inflation further moderating, supporting the Fed’s anticipated easing in the coming months. But in the wake of surprisingly strong job growth for September reported last Friday, the gradual slowdown in price pressures suggests policymakers will opt for a smaller interest-rate cut when they meet next meet month — or even not cut at all.
Minutes of the last policy meeting showed a majority of FOMC minutes supported a 50-basis-point cut, though there was a preference among some officials to cut rates at a more gradual pace.
Meanwhile, Chinese stocks jumped after the release of details on stimulus measures, with China’s central bank setting up a swap facility to provide liquidity to institutional investors to buy stocks. Investors in China will look to a press conference by the finance ministry on Saturday for clues on its fiscal stimulus.
“After a few days of heavy profit taking, we expect the offshore market to move on to the second phase of the rally, which features slower gains, higher volatility but with the basics – earnings and valuations – back in focus,” said Richard Tang, China Strategist and Head of Research Hong Kong at Julius Baer Group Ltd.
In France, Prime Minister Michel Barnier’s government will present budget details to his cabinet on Thursday evening in Paris. It’s expected to be an initial course of shock therapy to tackle swelling deficits, aiming to reassure skeptical bond investors and navigate forceful opposition in a fractured parliament.
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