Stocks climb, dollar dips as focus shifts to US inflation data

Stocks climb, dollar dips as focus shifts to US inflation data
Stocks climb, dollar dips as focus shifts to US inflation data

By Caroline Valetkevitch

NEW YORK (Reuters) -Global stock indexes rose on Monday while the US dollar edged lower, with investors awaiting this week’s US inflation data that is expected to be key for the outlook for US interest rates.

While the US consumer prices report will likely take center stage, US producer price data is also due this week, along with final reports on European inflation that should reinforce expectations for a June rate cut from the European Central Bank.

Reports on Chinese retail sales and industrial output are expected as well.

This week brings comments from a host of Federal Reserve speakers, including Fed Chair Jerome Powell.

Investors have been focused on inflation as they weigh how soon the US central bank is likely to cut rates.

Economists polled by Reuters expect the closely watched core CPI to rise by 0.3% in the month, down from 0.4% in March, for an annual gain of 3.6%, down from 3.8%.

Investors need to “get some level of comfort that inflation is not going back up, and potentially going down, to give the Fed cover for at least one or maybe two cuts before the end of the year,” said Thomas Hayes, chairman at Great Hill Capital LLC.

The Dow Jones Industrial Average rose 98.29 points, or 0.25%, to 39,611.13, the S&P 500 gained 5.65 points, or 0.11%, to 5,228.33 and the Nasdaq Composite gained 30.04 points, or 0.18%, to 16,370.91.

The first-quarter US earnings season is winding down, but investors will see reports this week from some big US retailers including Walmart.

MSCI’s gauge of stocks across the globe rose 1.54 points, or 0.20%, to 783.60, and the STOXX 600 index was nearly flat.

Earlier in the day, Chinese stocks eased. China’s finance ministry said on Monday it will start the long-awaited sales of 1 trillion yuan ($138.23 billion) of long-term treasury bonds that Beijing hopes will help stimulate key sectors of a flagging economy this week.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.18% to 105.14.

Story continues

The relative outperformance of the US economy continues to underpin the dollar, while only the threat of Japanese intervention is stopping it from re-testing the 160 yen barrier.

The Bank of Japan on Monday sent a hawkish signal to government markets by cutting the amount of Japanese bonds it offered to buy in a regular operation.

Against the Japanese yen, the dollar was up 0.1% at 155.90, after touching its highest level since May 2 at 155.965, and the euro was up 0.3% at $1.0803.

Benchmark 10-year note yields were last down 3 basis points at 4.615%.

US crude gained 1.11% to $79.13 a barrel and Brent rose to $83.51 per barrel, up 0.87% on the day. Spot gold lost 0.77% to $2,342.20 an ounce.

(Additional reporting by Sruthi Shankar and Shristi Achar A in Bengaluru, and Amanda Cooper in London and Wayne Cole in Sydney; Editing by Shri Navaratnam, Sam Holmes, Kevin Liffey, Will Dunham and Emelia Sithole-Matarise)

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