NEW YORK Feb 28 (Reuters) – A global equities index fell
slightly on Wednesday while Treasury yields edged down and the
dollar rose against a basket of currencies as investors were
wary the day before U.S. inflation data that could influence
Federal Reserve policy.
January’s U.S. personal consumption expenditures price index
(PCE), the Fed’s preferred inflation measure, is due on
Thursday. Economists polled by Reuters poll expect the index to
have risen 0.3% on a monthly basis after a 0.2% increase in
December.
Traders already have dialed back expectations for Fed
interest rate cuts after a slew of strong data, including hot
consumer price index (CPI) and producer price index (PPI)
readings. They expect an easing cycle to kick off in June,
compared with the start of 2024 when bets were on March.
“We’re on hold until we get the PCE print. The market’s
going to chop around,” said Jack Janasiewicz, portfolio manager
and lead portfolio strategist at Natixis Investment Managers
Solutions. “Between CPI and PPI there’s a narrative that
inflation is going to be stickier than expected or even
potentially having a modest re-acceleration.”
Janasiewicz noted that U.S. stock indexes remained not far
from records reached last week, partly thanks to a
better-than-expected fourth-quarter earnings season including a
boost from Nvidia on optimism about artificial
intelligence.
“The market’s had every chance to sell off but it’s holding
up pretty well,” Janasiewicz said. “It’s actually been looking
past inflation to an extent because earnings has been better
than expected.”
Other data this week that may shape expectations on Fed
policy include a second estimate of gross domestic product,
jobless claims and manufacturing activity.
MSCI’s gauge of stocks across the globe shed
0.33%.
On Wall Street the Dow Jones Industrial Average
finished down 23.39 points, or 0.06%, at 38,949.02.
The S&P 500 dropped 8.42 points, or 0.17%, to
5,069.76 while the Nasdaq Composite closed down 87.56
points, or 0.55%, at 15,947.74.
European stocks dipped as lackluster corporate earnings
weighed on sentiment with the pan-European STOXX 600 index
closing down 0.35%.
In currencies, the dollar jumped against the euro and yen on
Wednesday as investors positioned for U.S. and European
inflation data due on Thursday, with month-end portfolio
rebalancing also likely to sway market direction.
The dollar index, which measures the greenback
against a basket of major currencies, rose 0.1% to 103.94.
The euro was down 0.08% at $1.0835. Against the
Japanese yen, the dollar strengthened 0.12% at 150.69.
U.S. Treasuries yields slid across the board with yields on
benchmark U.S. 10-year notes falling 4.7 basis
points to 4.268%, from 4.315% late on Tuesday, while the 30-year
bond yield fell 3.5 basis points to 4.4047% from
4.44%. The 2-year note yield, which typically moves
in step with interest rate expectations, fell 6.6 basis points
to 4.6457%, from 4.712%.
In crypto currencies, bitcoin surged for a fifth day,
buoyed by flows into new U.S. spot bitcoin exchange traded
products that have driven it up nearly 40% in February, which
would mark its largest monthly rally since December 2020.
It rose 5.96% at $60,111.00, after hitting its highest level
since November 2021.
Gold prices ticked up as traders strapped in for economic
data and comments from U.S. central bank officials.
Spot gold added 0.18% to $2,033.37 an ounce.
In commodities, U.S. crude oil settled down while Brent
barely gained as traders worried the Fed would be slow to cut
rates. Growing U.S. crude stockpiles added pressure.
U.S. crude settled down 0.42% at $78.54 per barrel
while Brent finished at $83.68, up 0.04% on the day.
(Reporting by Tom Wilson in London and Ankur Banerjee in
Singapore; Editing by Muralikumar Anantharaman, Jamie Freed,
Tomasz Janowski, Nick Macfie, Aurora Ellis, Will Dunham and
David Gregorio)
