Stocks rise as traders brace for US inflation data: latest market updates

The Stoxx Europe 600 rose 0.6%, headed by energy, basic resources and technology shares. UK stocks outperformed after data showed the jobs market is cooling. Futures on the S&P 500 and Nasdaq 100 rose 0.4% and 0.7% respectively. US Treasury yields were steady and a gauge of the dollar was flat.

The options market is more concerned about a big S&P 500 move after the inflation report than it is about the Fed’s interest rate decision next week, according to Citigroup Inc. Traders are hedging for moves of 0.9% in either direction – the biggest implied shift ahead of a consumer price index report since April 2023.

Headline CPI is likely to accelerate, while the core gauge should slow slightly, according to Bloomberg Economics.

“Ultimately, we don’t expect the February CPI report to provide clear enough evidence of disinflation to boost the Fed’s confidence to cut rates,” Bloomberg economists Anna Wong and Stuart Paul wrote in a note. “However, they could have enough confidence as soon as May.”

Meanwhile, the Hang Seng Tech Index, which tracks Chinese technology shares listed in Hong Kong, became the latest gauge in the battered market to rally 20% from a recent low.

Elsewhere, the British pound dropped after data showed an unexpected increase in the unemployment rate and a slowing in the pace of pay increases, tempering concerns at the Bank of England about inflationary forces. The benchmark FTSE 100 climbed 0.9% and gilt yields fell.

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The yen weakened for the first time in six days after Bank of Japan Governor Kazuo Ueda pointed to some weakness in consumption of nondurable goods, while also signaling the central bank remains on track to end its negative-interest-rate policy. The BOJ makes it next policy decision on March 19.

“We see the BOJ exiting the negative-interest-rate policy in April on the belief that the BOJ might want to digest more data,” Malayan Banking Bhd. strategists led by Saktiandi Supaat wrote in a research note. “Should the BOJ disappoint on the exit at the upcoming March meeting, USD/JPY could rise and we do see the opportunity to sell the pair on rally.”

Japan’s 10-year bond yield climbed to the highest level in three months following a Jiji report that said the BOJ will end negative interest rates at next week’s meeting if wage data comes out strong.

In commodities, oil edged higher as traders awaited OPEC’s monthly report and industry figures on US stockpiles. Gold eased from a record high. Bitcoin held just above $72,000 after surpassing that level for the first time on Monday.