Stocks, futures rise as focus switches to US CPI: Markets wrap

Shares advanced before a report that’s expected to show a slowing in US inflation, which will help shape the outlook for the Federal Reserve’s next steps. A move by China’s sovereign wealth fund to buy shares of the country’s largest banks fueled further optimism.

MSCI’s Asian equity index headed for a sixth day of gains as stock benchmarks traded higher across the region. Futures for European and US stocks extended their climbs after the S&P 500 rose for a fourth day Wednesday, its longest winning streak since August on the back of less hawkish commentaries by some US policymakers.

Fed officials are taking a more patient approach now that rates are at or near their peak, Boston Fed President Susan Collins said Wednesday. Her Atlanta counterpart Raphael Bostic said the central bank doesn’t need to keep tightening unless inflation’s descent starts to stall.

Traders’ focus is now turning to Thursday’s US consumer price data, which economists are forecasting to show a further easing in inflation. Fed minutes published Wednesday showed officials agreed last month policy should remain restrictive for some time, while noting the risks of overtightening now had to be balanced against keeping inflation on a downward path.

US CPI is forecast to have slowed to an annual rate of 3.6% in September from 3.7% the previous month, according to a Bloomberg survey. Data published Wednesday showed prices paid to producers rose by more than forecast in September, bolstered by higher energy costs.

“The less hawkish turn that we’ve seen from the Fed is in part to try and reduce the volatility that we’ve seen in rates markets and to try and bring expectations down to a more reasonable level,” Mehvish Ayub, senior investment strategist at State Street Global Advisors, said on Bloomberg Television.

Meanwhile, the Hang Seng Index jumped as much as 2.2% after China’s state-owned Central Huijin Investment Ltd. increased its stake in the nation’s biggest banks for the first time since 2015. Oil fell for a third day, erasing all of the surge on Monday that followed Hamas’ attack on Israel.

A gauge of dollar strength fell for a seventh day, set for the longest run of losses in over three years, amid the latest Fed commentaries. The yen held near 149 to the greenback. Treasury 10-year yields were little changed at 4.57% after dropping to a two-week low of 4.54% Wednesday.

West Texas Intermediate edged down to around $83 a barrel after slumping Wednesday following a New York Times report that Iran may have been surprised by the assault. Gold was little changed.

Elsewhere, Adani Ports & Special Economic Zone — part of Indian billionaire Gautam Adani’s conglomerate slammed by a US shortseller earlier this year —  is ending its offer to buy back its 2024 dollar bonds after receiving more bids than it targeted. The company received notes with a principal amount of $213 million as of its Oct. 11 initial deadline, according to a statement.

Key events this week:

• UK industrial production, Thursday
• US initial jobless claims, CPI, Thursday
• European Central Bank publishes account of September policy meeting, Thursday
• Fed’s Raphael Bostic speaks, Thursday
• China CPI, PPI, trade, Friday
• Eurozone industrial production, Friday
• US University of Michigan consumer sentiment, Friday
• Citigroup, JPMorgan, Wells Fargo, BlackRock results as the quarterly earnings season kicks off, Friday
• G20 finance ministers and central bankers meet as part of IMF gathering, Friday
• ECB President Christine Lagarde, IMF Managing Director Kristalina Georgieva speak on IMF panel, Friday
• Fed’s Patrick Harker speaks, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.3% as of 6:33 a.m. London time. The S&P 500 rose 0.4%
• Nasdaq 100 futures rose 0.3%. The Nasdaq 100 rose 0.7%
• Euro Stoxx 50 futures rose 0.4%
• Japan’s Topix rose 1.4%
• Hong Kong’s Hang Seng rose 2.1%
• The Shanghai Composite rose 0.8%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%
• The euro rose 0.1% to $1.0631
• The Japanese yen was little changed at 149.09 per dollar
• The offshore yuan was little changed at 7.2996 per dollar
• The Australian dollar was little changed at $0.6418
• The British pound was little changed at $1.2319

Cryptocurrencies

• Bitcoin rose 0.4% to $26,823.77
• Ether fell 0.2% to $1,560.93

Bonds

• The yield on 10-year Treasuries was little changed at 4.57%
• Japan’s 10-year yield declined 2.5 basis points to 0.745%
• Australia’s 10-year yield declined six basis points to 4.37%

Commodities

• West Texas Intermediate crude fell 0.5% to $83.11 a barrel
• Spot gold rose 0.3% to $1 879.44 an ounce