US inflation in focus as stock markets take a breather

AP News
Posted: Apr 14, 2016 7:53 AM
US inflation in focus as stock markets take a breather

LONDON (AP) — European shares were steady Thursday despite a second day of strong gains in Asia, where investors were encouraged by an uptick in China's trade and Singapore's surprise easing of monetary policy. U.S. inflation figures and another batch of earnings reports will likely dominate trading through the rest of the day.

KEEPING SCORE: In Europe, Germany's DAX was up 0.1 percent at 10,034 while the CAC-40 in France fell 0.1 percent to 4,488. The FTSE 100 index of leading British shares was steady at 6,362. U.S. stocks were poised for a flat opening too, with Dow futures and the broader S&P 500 futures down 0.1 percent.

INFLATION: Traders are keenly awaiting U.S. inflation figures for March after equivalent figures for the 19-country showed an upward revision to zero from minus 0.1 percent. The expectation is that headline U.S. inflation in the year to March edged higher to 1.2 percent, but that the core rate, the Fed's preferred measure, was unchanged at 2.3 percent and above the 2 percent target. Weekly jobless claims and a run of speeches from Fed officials will also be monitored but inflation appears to be the main point of interest.

ANALYST TAKE: "Another month of inflation picking up would surely support the argument for another rate hike before the end of the year, which the market is currently pricing in," said Craig Erlam, senior market analyst at OANDA.

US EARNINGS: The quarterly corporate earnings result season is off to a mixed start, with aluminum company Alcoa disappointing but JP Morgan Chase & Co. doing better than expected. On Thursday, there are a raft of financial companies reporting, including Bank of America, BlackRock and Wells Fargo Bank. "It will be interesting to see whether the others can follow in the footsteps of JP Morgan and exceed expectations, with the bar having been set quite low in the lead up to the results," said OANDA's Erlam.

SINGAPORE: Highly trade-dependent Singapore implemented a "zero percent appreciation" policy for its currency after economic growth was flat in the first quarter of the year. The step toward monetary easing suspended a policy of allowing the Singapore dollar to gradually appreciate. The hope is that the new policy will help shore up exports.

ASIA'S DAY: Japan's benchmark Nikkei 225 closed 3.2 percent higher at 16,911.05, as the yen slightly weakened against the dollar. Hong Kong's Hang Seng gained 0.9 percent to 21,337.81 while the Shanghai Composite index was up 0.5 percent at 3,082.36. Australia's S&P/ASX 200 rose 1.2 percent to 5,117.70. South Korea's KOSPI climbed 1.8 percent to 2,015.93. Markets in Thailand and India were closed for holidays.

ENERGY: Benchmark U.S. crude oil was flat at $41.75 a barrel in electronic trading on the New York Mercantile Exchange while Brent crude, the international standard, rose 9 cents to $44.27.

CURRENCIES: The euro fell 0.1 percent to $1.1265 while the dollar declined 0.2 percent to 109.25 yen.