Hope rally turns choppy as US inflation looms – .

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US and European Equity Futures Rise, Oil Bounces Back – .


SYDNEY, Dec.9 (Reuters) – Shares rose in choppy trading on Thursday as concerns over the economic impact of the Omicron coronavirus variant subsided, but growing caution before US inflation data leveled off by other risky assets such as oil and the Australian dollar.

Bonds healed losses as a brighter outlook for viruses clears a clearer path to higher rates. Traders’ attention turned to the release of inflation data on Friday and a Federal Reserve meeting next week for guidance on the timing of the hike.

The largest MSCI index of Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) rose 0.5% to a two-week high. The Japanese Nikkei (.N225) remained stable, gaining 3.5% in the previous two sessions.

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Futures on the S&P 500 were flat after a 0.3% rise in the cash index overnight took it to less than 1% of a new record high.

“Volatility remains high as the news drip around Omicron continues,” ANZ Bank analysts said, and beyond that there looms an expectation of higher US interest rates in 2022.

“An acceleration in the pace of reduction by the Fed is almost considered inevitable. But a high number could raise expectations of a hike in the second quarter of next year. “

On Wednesday, BioNTech and Pfizer (PFE.N) said that a three-shot treatment of their COVID-19 vaccine was able to neutralize the Omicron variant in a lab test.

Market sentiment has also recovered with other preliminary data suggesting that Omicron is less onerous than initially feared, although this was offset by the imposition of tighter restrictions in England to curb the market. spread of Omicron. Read more

The Australian dollar was up 2.6% in three sessions and held steady at $ 0.7166 early in Thursday.

Brent crude added $ 10 a barrel from last week’s three-and-a-half-month low and held steady at $ 75.82.

The Chinese yuan was held at 6.3458 to the dollar after hitting a three-and-a-half-year high at 6.3438 on Wednesday, with an easing move in monetary policy starting next week that supports the Chinese economy.

The pace of China’s ex-factory price hike slowed last month, according to data released Thursday, with a still impressive 12.9% year-on-year rate, while inflation climbed to 2.3% year-on-year . Read more

EXPECTED INFLATION

The main scheduled event for the week is Friday’s US inflation data, seen as a prelude to the December Fed meeting next week.

Fed funds futures are valued for rates to take off next May and on Wednesday two-year Treasury yields hit their highest level since March 2020 at 0.7140%. They were flat at 0.6955% on Thursday and 10-year yields held steady at 1.5332% after jumping 4.6 basis points on Wednesday.

Economists expect US headline inflation to hit 6.8% last month, although previous readings have surprised on the upside.

“A 7 as a big number can be good for dollar bulls and push up 2-year Treasury yields,” said Chris Weston, head of research at brokerage Pepperstone.

“But I think we need a steeper US Treasury yield curve to convince us of better growth in 2022.”

Wednesday’s moves were not enough to support the dollar, which slipped sharply against the euro to trade at $ 1.1333 on Thursday morning.

Elsewhere in currency trading, the yen fell below its 50-day moving average at 113.76 to the dollar. The British pound fell to a one-year low at $ 1.31615 overnight with the announcement of stricter COVID-19 rules.

The US dollar index hovered at 96.029.

It had recovered slightly to $ 1.3197 on Thursday. Gold was stable at $ 1,783 and an ounce and bitcoin appear to have bottomed out around $ 50,000.

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Reporting by Tom Westbrook; Editing by Sam Holmes

Our Standards: Thomson Reuters Trust Principles.

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