Stocks Shake Off Bank Woes, Set for Quarterly Gain: Markets Wrap

(Bloomberg) — US equity futures edged higher after a key measure of US inflation stepped down last month by more than expected, and consumer spending stabilized, suggesting the Federal Reserve may be close to the end of its rate-hiking campaign. The dollar pared an advance.

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Excluding food and energy, the Fed’s preferred inflation gauge — the personal consumption expenditures price index — rose 0.3% in February, slightly below the median estimate of 0.4% in a Bloomberg survey of economists. The overall PCE climbed by the same amount, Commerce Department data showed Friday.

Contracts on the S&P 500 rose 0.2%, while those on the tech-heavy Nasdaq 100 were little changed, with the underlying index set for its strongest March since 2010.

Digital World Acquisition Corp., the blank-check firm taking Donald Trump’s media company public, rallied in premarket trading after he became the first former president to be indicted. Other Trump-linked stocks also gained.

If equities “end the week in the green, that’s a big deal considering how almost disastrous the rest of the month was,” said Craig Erlam, a senior market analyst at Oanda. “Confidence is easily shattered and difficult to restore and a positive end to the week would send a strong signal that investors are feeling reassured by the lack of turmoil recently.”

Treasury yields drifted following Friday’s US data at the end of a quarter of wild swings. Investors have struggled to adjust for banking collapses and the shifting outlook for interest rates amid high inflation and threats to economic growth. The two-year yield was around 4.11% Friday while the 10-year maturity was about 3.53%.

Traders remained on guard for any choppiness amid quarter-end rebalancing from pension funds and options hedging activity. And they continue to debate the extent to which policy makers may cut interest rates this year. Several strategists have said markets are wrong to expect easing by the Fed this year as the labor market remains robust, though US unemployment claims ticked up for the first time in three weeks.

A round of Fed speakers on Thursday suggested more monetary tightening was necessary to quell inflation, even after the collapse of three US banks this month. Boston Fed President Susan Collins said tightening was needed, while Richmond Fed President Thomas Barkin said the Fed can raise rates more if inflation risks persist.

In Europe, euro-area inflation plunged by the most on record, but a new high for underlying price gains highlighted the tricky task facing the European Central Bank as it decides how far to lift interest rates. Consumer prices rose 6.9% from a year ago in March — down from 8.5% in February and less than the 7.1% median estimate of economists, but core inflation quickened to 5.7%.

Elsewhere in markets, oil headed for a weekly surge of more than 7% amid ongoing disruption to Iraqi exports. Gold was little changed. And Bitcoin was set to end its best quarter since March 2021 with a gain of about 70%.

Key events this week:

• ECB President Christine Lagarde speaks, Friday
• New York Fed President John Williams speaks, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.2% as of 8:49 a.m. New York time
• Nasdaq 100 futures were little changed
• Futures on the Dow Jones Industrial Average rose 0.3%
• The Stoxx Europe 600 rose 0.5%
• The MSCI World index rose 0.7%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%
• The euro fell 0.2% to $1.0882
• The British pound was little changed at $1.2381
• The Japanese yen fell 0.2% to 132.95 per dollar

Cryptocurrencies

• Bitcoin fell 0.3% to $28,060.63
• Ether rose 0.5% to $1,804.69

Bonds

• The yield on 10-year Treasuries declined two basis points to 3.53%
• Germany’s 10-year yield declined four basis points to 2.33%
• Britain’s 10-year yield advanced one basis point to 3.53%

 

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