Stocks edge up as traders bet on slowing inflation

BLOOMBERG

Global stocks and bonds edged higher ahead on speculation that a crucial US inflation report will show that price pressures slowed last month, cementing the view that interest rates have peaked.  Europe’s Stoxx 600 index added 0.2%, with mining stocks led by a 4% gain in Glencore Plc after it agreed to buy a majority stake in Teck Resources Ltd’s coal business for almost $7 billion. Vodafone Group Plc fell 1.7% after reporting weaker profits in southern Europe.
Equity futures also rose, with contracts on Nasdaq 100 advancing 0.3%. Treasury yields slipped two basis points to 4.61%. West Texas Intermediate futures climbed. US inflation probably eased to an annual rate of 3.3% in October from 3.7% in September, according to a Bloomberg survey of economists.
However, core inflation which strips out energy and food costs, is predicted to be unchanged, implying slow progress toward the Federal Reserve’s 2% inflation target.
Michael Preiss, a portfolio manager at Das Family Office Pte Ltd, expects the figures will show sticky inflation, but added that “signalling from the Fed increasingly leads us to the belief that we are at the end of the tightening cycle.”
“Our base case is no rate cuts and no recession, which potentially means a year-end rally in global risk assets, especially equities,” Preiss said on Bloomberg Television.  Fed Vice Chair Philip Jefferson and Chicago Fed President  Austan Goolsbee will also speak later in the day, and Home Depot Inc reports earnings.
Traders are also watching to see how the US inflation data impacts the yen. Some analysts have said a stronger-than-expected print may push the Japanese currency to a 33-year low and potentially trigger an intervention by the central bank.  Japanese Finance Minister Shunichi Suzuki has warned repeatedly this week that the government will respond to excessive moves. The currency traded around 151.7 per dollar, close to falling past the 151.95 threshold.
Elsewhere in currency markets, the pound rose 0.2% in response to data showing UK labour markets is holding up well.
Earlier, MSCI’s Asia Pacific equity index advanced 0.3%. Chinese President Xi Jinping and his US counterpart Joe Biden are due to meet Wednesday on the sidelines of the Asia-Pacific Economic Cooperation summit in San Francisco.