US stock futures slip as investors await latest inflation data
US stock futures slid on Friday as investors awaited the latest signs of the strength of inflationary pressures, while European markets vacillated between small gains and losses.
S&P 500 futures were 0.5 percent lower and Nasdaq Composite futures were down 0.9 percent. The moves point to a reversal of Thursday’s Wall Street rally, which followed a series of declines earlier in the week as strong economic data sparked concerns about more rate hikes by the Federal Reserve. The indices are down 2.5 percent and 2.6 percent respectively this week.
The US data on personal consumption spending, the Fed’s preferred inflation measure, is expected to be released at 1:30 p.m. UK time. A higher than expected figure would likely be taken as further evidence that the Fed would stick to its aggressive rate hike agenda.
“The outlook for core PCE is mixed,” said analysts at SEB Research. “Our forecast is for a monthly increase of 0.3% to 0.4%, slightly below the consensus estimate but still too high to be consistent with the Fed’s target.”
In Europe, the regional Stoxx 600 rose 0.15 percent, while London’s FTSE 100 gained 0.3 percent after previously falling the same percentage.
Germany’s Dax fell 0.2 percent and France’s Cac 40 slipped 0.1 percent.
“In the near term, European equities are relatively strong versus the US as their composition is less interest rate sensitive and they have not yet reaped the full dividends of milder weather and lower energy costs,” said Antonio Cavarero, head of investments at Generali Insurance Asset Management.
The price of European natural gas has fallen to its lowest level since the beginning of the first anniversary of Russia’s full-scale invasion of Ukraine.
However, unrest over the European Central Bank’s next move continues. On Friday, Joachim Nagel, President of the Bundesbank and a member of the Governing Council of the ECB, said that inflation was likely “to remain at very high levels” and would require “significant rate hikes beyond March”.
In Asia, the Hang Seng Index fell 1.7 percent, while China’s CSI 300 lost 1 percent. Although e-commerce group Alibaba’s fourth-quarter earnings beat analysts’ expectations, its shares fell 5.4 percent, suggesting investors are skeptical about the Chinese economy despite the government’s strict Covid-19 restrictions. 19 restrictions eased.
The euro fell 0.15 percent, while the dollar index, which measures the greenback against a basket of six peer currencies, gained 0.2 percent.
US Treasury yields edged lower, with the 10-year and 2-year notes falling 0.02 percentage points to 3.9 percent and 4.7 percent, respectively. The yield on 10-year Bunds was stable at 2.47 percent.
Brent crude rose 0.7 percent to $82.78 a barrel, while WTI, the US equivalent, rose 0.6 percent to $75.86 a barrel.