By Amanda Cooper
LONDON (Reuters) -Global shares hovered near record highs on Thursday, while the dollar headed for its first weekly gain in a month, ahead of a trio of U.S. data releases that has the potential to shift the outlook for interest rates.
U.S. consumer inflation data earlier this week showed price pressures heated up more quickly than expected in February.
With the next Federal Reserve meeting less than a week away, investors have held on to the view that the central bank will still cut rates around three times this year.
The Bank of Japan also meets next week. Officials including Governor Kazuo Ueda have sought to temper expectations of an imminent shift out of negative interest rates, which has set the yen on course for its worst weekly performance in a month.
The MSCI All-World index was last up 0.1% at 775.12, having hit a record high of 778.13 last week.
Investors on Thursday will get a look at U.S. wholesale inflation, consumer spending and weekly jobless claims, all of which could offer insight into the Fed’s three key areas of focus – growth, price pressures and the labour market.
“The market needs the current story to continue, and the current story is one of a relative soft landing, which is an acceptable level of economic activity that is non-inflationary,” Samy Chaar, chief economist at Lombard Odier, said.
“What has been holding the global economy together has been the health of the U.S. consumer and you don’t want to be in an environment where there are some weak signs in labour market and therefore in consumption patterns and you start to get on the weak side of core growth, so that is something we’ll be monitoring,” he said.
In addition to retail sales figures, which last month missed expectations, producer price data, which influences the core personal consumption expenditures (PCE) price index, and initial weekly jobless claims are due.
“With payroll growth still solid and inflation proving to be a bit stickier recently, we suspect the FOMC (Federal Open Market Committee) will still be seeking greater confidence at the end of its meeting next week that inflation is headed back to 2% on a durable basis,” economists at Wells Fargo said in a client note.
PERKY TECH
S&P 500 and Nasdaq futures rose 0.3% and 0.5%, respectively, with technology stocks likely to be in focus later after Apple supplier Foxconn offered an upbeat outlook for 2024, having beaten profit forecasts in the fourth quarter.
In Europe, the STOXX 600 rose 0.26%.
The dollar, meanwhile, edged up 0.14% to 102.89, and headed for its first weekly gain in a month, having pulled above its recent lows.
The euro eased 0.1% to $1.0937, but remained in sight of two-month highs, while the yen weakened, allowing the dollar to rise 0.1% to 147.90. So far this week, the dollar has risen 0.5% against the yen, the largest weekly gain in a month.
In Japan, swirling speculation that the BOJ could end negative interest rates as soon as next week has kept domestic bond yields supported.
Investors have been increasingly pricing in the chance of a change in policy this month, particularly after news of bumper pay rises from some of Japan’s biggest names at this year’s annual wage negotiations.
Ueda earlier this week noted that wage growth was crucial to determining the timing of any change in monetary policy, but that the economy was showing some signs of weakness.
A preliminary survey on big firms’ wage talks is due on Friday. BOJ policymakers have said the talks are key to determining the timing of the central bank’s stimulus exit.
In commodities, Brent rose 0.7% to $84.64 a barrel, while gold fell 0.25% to $2,169 an ounce. [GOL/]
($1 = 7.1915 Chinese yuan renminbi)
(Additional reporting by Rae Wee in Singapore; Editing by Christopher Cushing and Bernadette Baum)
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