The data is expected to show an 8.4% annual increase in consumer prices
Wall Street stocks finished lower overnight as bond yields rallied further in anticipation of the US inflation report. The yield on the benchmark 10-year US Treasury note exceeded 2.8%, its highest since January 2019. The S&P 500 fell 1.7%, the Dow Jones Industrial Average retreated 1.2%, and the tech-heavy Nasdaq Composite declined 2.2%. The data is expected to show an 8.4% annual increase in consumer prices — the highest level since December 1981. Investors are also nervous as earnings season kicks off this week.
Following suit, Asian equities fell on Tuesday amid persistent geopolitical and economic concerns. Japan’s Nikkei 225 gave up 1.8% after remarks by Japanese prime minister as he once again highlighted the importance of FX stability. S&P/ASX 200 dropped 0.42% after the data showed that NAB business confidence index for March came in at 16, adding just three points. Bucking the trend, Hong Kong’s Hang Seng Index reversed early losses to add 0.42% while China’s Shanghai Composite rallied 1.46% after the authorities approved first batch of new video game licenses in nine months.
In Europe, equities opened the day on a softer note on Tuesday, with banking sector leading the losses. The pan-European Euro Stoxx 600 index was down 1.2% in early deals. On the data front, the jobless rate in the UK fell to its lowest level since 2019 while Germany’s March wholesale price index came in at 6.9% vs +1.7% m/m prior. US stock index futures declined in early morning trading as investors braced for a key inflation report Tuesday.
Elsewhere, the USD index keeps flirting with the 100.00 mark on Tuesday as traders await the US inflation report that could push the greenback above the key barrier as strong figures would add to Fed’s hawkishness towards monetary policy tightening. As such, EURUSD has settled below 1.0900, threatening the 1.0830 zone that represents the intermediate support on the way towards the 1.0800 two-year low. However, the euro could hold above this mark ahead of the ECB meeting due on Thursday.