Markets Wrap: Global Stocks Surge as Investors Brace for US Inflation Data

Global equities are on the rise as a tech-led rally on Wall Street boosts optimism among investors. The market is heading for a fresh record, with many anticipating that Wednesday’s key US inflation report will not undermine the case for Federal Reserve interest-rate cuts.

European stocks saw gains, while US equity futures remained steady. The MSCI All Country World Index extended its winning streak, marking the longest run of gains since January. Despite signals from Federal Reserve Chair Jerome Powell that interest rates may rise, the S&P 500 advanced. The focus was on the upcoming US consumer price index data, with expectations for a slight moderation in price increases. Core CPI, which excludes volatile food and energy costs, is forecasted to slow to 0.3% month-on-month.

Investors are closely watching the market reaction to the CPI report. According to a survey conducted by 22V Research, 49% of investors expect a “risk-on” response, while only 27% anticipate a “risk-off” reaction. In Asia, benchmarks are on the rise after reaching a two-year high on Tuesday. Taiwan Semiconductor Manufacturing Co. led the advance, while shares in Japan remained stable, and those in mainland China saw a slight decline.

In the commodities market, oil prices rose following reports of shrinking US stockpiles. Copper futures in New York rallied to a record high, sparking a short squeeze and driving the most-liquid contract to trade at a premium. Gold prices steadied after a nearly 1% increase on Tuesday.

Looking ahead, key events this week include Eurozone industrial production and GDP data, as well as US retail sales and business inventories. The Federal Reserve will also be in focus, with speeches from Minneapolis Fed President Neel Kashkari, Philadelphia Fed President Patrick Harker, Cleveland Fed President Loretta Mester, and Atlanta Fed President Raphael Bostic scheduled throughout the week.

Stocks across the board showed mixed movements, with the Stoxx Europe 600 rising 0.4% and the MSCI Asia Pacific Index up 0.4%. Currencies were relatively stable, with the euro and the Japanese yen seeing slight gains. Cryptocurrencies also saw modest increases, with Bitcoin and Ether on the rise.

Bond yields declined slightly, with the yield on 10-year Treasuries dropping one basis point. In the commodities market, Brent crude oil rose to $82.97 a barrel, while spot gold increased to $2,363.21 an ounce.

Overall, the market remains optimistic, with investors cautiously optimistic about the economic outlook. The upcoming US inflation report will be a key factor in determining market sentiment and the future direction of equities and currencies.

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