Wall Street shares derive ahead of U.S. inflation data

Wall Street shares went lower ahead of U.S. inflation data later in the week which may determine the future direction of central banks ’monetary policies.

The broad-based S&P 500, Wall Street’s dominant capital gauge, jumped 0.3 percent. The Nasdaq Composite index focused on technology was flat.

The Stoxx Europe 600 gained 0.2 percent to end the session at record highs, although investors turned in relatively good European equity. The UK’s FTSE 100 climbed 0.1 per cent.

Economists surveyed by Bloomberg expect U.S. inflation data on Thursday to show that consumer prices have risen 4.7 percent in May from the same month last year, following strong unexpected growth in April. Core inflation, which eliminates volatile food and energy costs, is projected to reach an annual reading of 3.4 percent, its highest since 1993 according to Data from the St. Louis Fed.

The Federal Reserve, which meets next week, sees strong inflation as a temporary effect of the economy’s reopening following pandemic arrests. Investors are alerted, however, to persistent price resistance that could force monetary policy makers to raise interest rates faster than expected. Since March last year, the Fed has acquired $ 120 billion in assets each month and has set lending costs at record lows.

“It will be a year of transition for monetary policy,” said Gergely Majoros, a member of the investment committee of European funds manager Carmignac. After accustoming it to the strong support of central banks, he added, “the transition will be difficult for investors to manage.”

Janet Yellen, the U.S. Treasury Secretary, told Bloomberg on Sunday that it would be “a plus” if President Joe Biden’s multimillion-dollar fiscal stimulus led to slightly higher rates.

“We’ve been fighting against too low inflation and too low interest rates now for a decade,” Yellen said.

Financial markets were “hyperactive on good money,” added Patrick Spencer, vice president of stocks at the Baird stock exchange, referring to peaks in the stock market. escort meme favored by retailers and frantic price movements in cryptocurrencies. “We need to get out of the sugar.”

Investors in the stock market were also worried, added Majoros de Carmignac, about companies not responding to analysts ’bullish earnings expectations.

After a season-long first-quarter earnings on both sides of the Atlantic, as firms took advantage of rising demand as the economy reopened, forecasts have broadly raised their expectations for earnings results. in the second quarter.

“Analyst optimism is reaching extreme levels,” Liberum strategists Joachim Klement and David Mak commented in a research note.

“We expect the next earnings season to become a reality check for many analysts and investors.”

The yield on the 10-year U.S. Treasury bond, which moves inversely to its price, increased from 0.01 percentage points to 1.565 percent. The yield has risen by about 0.9 percent since the beginning of 2021 when investors forecast higher inflation, which would erode the value of fixed interest payments on bonds.

Brent crude fell 0.6 percent to $ 71.45 a barrel after reaching its highest level since May 2019 in Asian trade earlier Monday.

In currencies, the Mexican peso rose 0.9 percent to $ 19.77 after Andrés Manuel López Obrador seemed established lost a two-thirds majority in the lower house of Mexico’s Congress that it needed for significant constitutional changes The euro was up 0.3 percent against the dollar at $ 1.2199. The pound gained 0.2 percent to $ 1,4177.

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