(Bloomberg) — European stocks look set to track the advance in Asian peers on bets that the upcoming US consumer price report will allow the Federal Reserve to start easing in September.
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The Euro Stoxx 50 futures climbed 0.3%, while US equity contracts traded little changed. The MSCI benchmark for Asian stocks climbed for a fourth session to recover further from last week’s rout. The gains came after the US producer price index rose less than forecast, helping to fuel a 1.7% rally in the S&P 500.
The easing of price pressures in the US has bolstered confidence that officials can start lowering borrowing costs and refocus on supporting the labor market. Forecasters expect a modest 0.2% increase in both the consumer price index and the core gauge excluding food and energy in data due Wednesday — which would mark the smallest three-month increase for the latter since early 2021.
“Global markets seem to be sounding the all-clear signal following the recession scare last week,” said Jun Rong Yeap, a strategist at IG Asia Pte. “Further inflation progress in US producer prices, which may be a precursor for more easing in the consumer prices as well, has offered additional legs to the risk rally.”
The pound fell against the dollar after UK inflation data came in below forecasts. The Consumer Prices Index rose 2.2% in July after a 2% gain in each of the two previous months, the Office for National Statistics said Wednesday. Economists had expected a reading of 2.3%, and the Bank of England was forecasting 2.4%.
New Zealand’s 10-year benchmark bond yields slumped as the central bank cut rates by 25 basis points, embarking on an easing cycle much sooner than previously indicated. The kiwi fell over 1% while local stocks rallied.
Treasuries were little changed after rising across the curve in the previous session, with positioning data showing traders remain bullish. A Bloomberg gauge of the dollar steadied around a four-month low.
The revival in risk sentiment and softness in the dollar supported Asian currencies. Indonesia’s rupiah…
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