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  • Writer's pictureThe San Juan Daily Star

Stocks near flat, dollar dips as focus shifts to US inflation data

Global stock indexes were little changed on Monday while the U.S. dollar index eased as investors awaited this week’s U.S. inflation data that is expected to be key for the outlook for U.S interest rates.

While the U.S. consumer prices report will likely take center stage, U.S. 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.

Chinese retail sales and other data 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 U.S. central bank is likely to cut rates. Markets are pricing in around an 80% chance of a rate cut by the Fed’s September meeting, with almost 44 basis points (bps) of reductions in total expected in 2024, LSEG data showed.

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%.

Paul Nolte, senior wealth adviser and market strategist for Murphy & Sylvest in Elmhurst, Illinois, said both CPI and PPI reports will be important to investors, but added that “there’s been so much discussion about the consumer. Is the consumer tapped out? And can the consumer still afford to spend? CPI is going to encapsulate a lot of that.”

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

“Earnings from Walmart and Home Depot will be interesting to get a gauge on how the consumer is doing” as well, Nolte said.

The Dow Jones Industrial Average fell 71.25 points, or 0.18%, to 39,441.59, the S&P 500 lost 2.30 points, or 0.04%, to 5,220.38 and the Nasdaq Composite gained 37.45 points, or 0.23%, to 16,378.31.

MSCI’s gauge of stocks across the globe rose 0.47 points, or 0.06%, to 782.53, and the STOXX 600 index edged up 0.02%.

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, eased 0.1% to 105.21.

The relative outperformance of the U.S. 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 markets by cutting the amount of Japanese government bonds it offered to buy in a regular operation.

Against the Japanese yen, the dollar was up 0.3% at 156.20, and the euro was up 0.19% at $1.0789.

The yield on benchmark U.S. 10-year notes fell 2.3 basis points to 4.481%, from 4.504% late on Friday.

U.S. crude rose 86 cents to settle at $79.12 a barrel, and Brent gained 57 cents to $83.36. Spot gold fell 1% to $2,336.76 per ounce.

(Additional reporting by 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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