Global Stocks Mixed Ahead of ECB Decision, US Inflation Data

AFP/APP

 New York: Global equities were mixed Monday at the start of a busy week that will feature a eurozone interest rate decision, the kickoff of earnings season, and key US inflation data.

After a positive round in most Asian indices, major European bourses posted solid gains, while a meandering session on Wall Street ended with little change.

“Today we moved sideways,” said Steve Sosnick of Interactive Brokers, who said attempts early in the day to rally fell flat before eclipse fever took hold.

“In the afternoon, I really do think a lot of people were just as focused on the Sun and the Moon as they were on the markets because the volumes were pretty light today,” said Sosnick, alluding to the mass exodus in many workplaces of staff drawn to the rare solar event.

Both Paris and Frankfurt enjoyed gains.

The European Central Bank is again keeping borrowing rates unchanged on Thursday. But the Frankfurt-based institution has been signaling that a change could be near in light of improving inflation data.

Thursday’s ECB meeting “looks like the prelude to yet another turning point for monetary policy in the eurozone: a final stop before the cut,” said ING bank economist Carsten Brzeski.

The ECB’s benchmark deposit rate currently sits at a record four percent, following an aggressive hiking campaign to rein in consumer prices driven higher by Russia’s war in Ukraine and pandemic-related supply disruptions.

Eurozone inflation, which peaked at over 10 percent in late 2022, has steadily declined in recent months and is now expected by the ECB to return to target in 2025.

Later this week, market participants will also seize upon hotly-awaited US inflation data that could shed light on the Federal Reserve’s monetary policy outlook.

The US calendar also includes the kickoff to first-quarter earnings season, with JPMorgan Chase and other large banks reporting results on Friday.

In his annual letter to shareholders, JPMorgan Chief Executive Jamie Dimon suggested that US equity markets were overvalued, pointing to “persistent inflationary pressures” that could lift interest rates further and dent the outlook.

Elsewhere, gold prices spiked as high as $2,353.95 per ounce on Monday to extend its record-busting streak, buoyed by its haven qualities amid ongoing Middle East turmoil.

Oil prices retreated after several positive sessions.

For Briefing.com’s Patrick O’Hare, the corporate earnings season that kicks off later this month “will be the litmus test” for the stock market rally.

“The stock market has kept its bullish posture amid some burgeoning confidence that earnings (and earnings expectations) will hold up given economic data that continues to surprise, in aggregate, to the upside,” he said in a note to clients.