Stock markets climb ahead of US inflation data

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Stock markets rose and the dollar traded on Thursday ahead of the release of US inflation data that is expected to have a major impact on the Federal Reserve’s plans to raise interest rates.

A generally positive week for global equities continued on the back of strong earnings results, further reopening of economies and signs of easing tensions between Russia and Ukraine, analysts said.

On the downside, the euro zone’s economy will grow less than expected this year, the European Commission said on Thursday, as energy prices and supply chain problems raise inflation and delay a faster recovery. sustained after the pandemic.

“Inflation and central banks’ response to it remain top of mind for investors,” noted Craig Erlam, senior market analyst at Oanda trading group. “The earnings season has come at the right time and although there have been bumps in the road, investors will reflect positively on it and it has certainly helped lift morale.”

Commentators warn that US inflation on Thursday above forecasts of 7.2% – which would be a new high in four decades – would prompt the Fed to act more aggressively to rein in prices.

Some Fed officials said Wednesday that policymakers would make their decisions based on the data coming in, with a 50 basis point hike – as opposed to the usual 25 basis points – not out of place.

Soaring inflation and bets that the US central bank will end its pandemic-era cheap liquidity policies have weighed on global markets in recent months, stalling a two-year rally that has taken them seen to reach record or multi-year highs.

Revenue increase

Some quarters feel investors may be getting used to the prospect of higher borrowing costs, while continued strong economic data and easing lockdown measures will continue to support corporate earnings.

Some quarters feel investors may be getting used to the prospect of higher borrowing costs, while continued strong economic data and easing lockdowns will continue to support corporate earnings

“While uncertainty remains about where inflation, particularly wages, and interest rates will play out in the months ahead, given the expected Fed tightening, this is essentially new ground. …historically, economies have grown in much higher interest rate environments,” the market strategist said. Louis Navellier. “Why is the market rallying when we are about to be hit by this horrible inflation news?” In a word: earnings. They are much better than anyone expected. The surprises are therefore enormous and the advice, on the whole, is excellent.

French energy giant TotalEnergies rebounded from the COVID crisis with a huge profit in 2021 as oil and gas prices soared. The company reported a net profit of $16 billion after a loss of $7.2 billion in 2020 when crude prices crashed.

Elsewhere, signs of progress on the diplomatic front in Eastern Europe have limited oil price gains in recent days, as has the possibility of a revived Iran nuclear deal, which could see Tehran resume global exports and ease supply issues. Both major contracts were nonetheless up on Thursday, having rallied to their highest levels since 2014 this year.

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