Headline CPI growth may fall below 3% for the first time in almost three years
US stocks closed mixed-to-higher on Friday, with the S&P 500 ending above the 5,000 figure for the first time ever to book a fifth straight week of gains. The index added 0.6% ahead of the weekend, while the Nasdaq Composite gained 1.2%. Bucking the trend, the Dow Jones slipped 0.1% to finish the week nearly unchanged. The S&P 500 climbed 1.4% and the Nasdaq advanced 2.3% for the week. Investors cheered a revision of December inflation data that showed it was even lower than first reported. Headline CPI was revised up 0.1% in November and revised down 0.1% in December, while there were no changes in core CPI.
Asian equities were mixed in thin trading on Monday, with most regional markets closed for the Lunar New Year. Japan was also shut for National Day. In individual stocks, shares of CSL shed nearly 5% after the biopharmaceutical giant announced a setback in a cardiovascular drug trial. Against this backdrop, Australia’s S&P/ASX 200 slipped 0.39% to snap a three-session rally. Now, investors look ahead to the release of crucial US inflation data due this week.
In Europe, equities were slightly higher at the open on Monday as overall risk mood remained more muted in anticipation of US CPI data due tomorrow. US stock index futures were directionless in early pre-market deals. Should headline CPI growth to fall below 3% for the first time in almost three years, stocks may advance on rate cut expectations. A slower growth in inflation is expected to come from a pullback in energy prices.
Meanwhile, the US dollar bounced in recent trading to settle slightly above the 104.00 figure that remains in the market focus. The USD index finished last week nearly unchanged, staying in consolidation mode. On the upside, the 104.60 zone represents the nearest significant barrier that capped gains last week. Should the CPI report come in lower than expected, the selling pressure may send the dollar below 103.95, followed by the 103.65 region. In a wider picture, the greenback stays relatively resilient as expectations for a Fed rate cut keep abating amid strong US economic data.