Receive free Markets updates
We’ll send you a myFT Daily Digest email rounding up the latest Markets news every morning.
European equities and Wall Street futures rose on Thursday ahead of a closely watched US inflation report that investors expect will influence the Federal Reserve’s next policy move.
European and Asian equities were also boosted after China said it would end a ban on tour groups travelling to dozens of countries, boosting the shares of luxury goods, travel and leisure stocks.
Europe’s region-wide Stoxx Europe 600 index added 0.3 per cent, extending gains from the previous session, while France’s Cac 40 rose 0.8 per cent and Germany’s Dax advanced 0.3 per cent.
Futures contracts tracking Wall Street’s benchmark S&P 500 added 0.5 per cent, while those tracking the tech-focused Nasdaq 100 gained 0.6 per cent ahead of the New York open.
Investors prepared for the latest US inflation reading later in the day, which is expected to show prices rose at an annual rate of 3.3 per cent in July, up from 3 per cent in the previous month, marking the first acceleration in the headline figure in more than a year.
Core inflation, which strips out volatile food and energy prices, is forecast to be 4.8 per cent — unchanged from the previous month, according to economists polled by Reuters.
But even as price pressures persist, the overwhelming majority of the market is betting that the US central bank will keep interest rates steady at its next meeting in September, having taken them to a 22-year high since last summer.
“I think a higher than expected number would produce some short-term equity and bond volatility but I doubt it would change expectations for the peak in Fed rates as there is a weight of evidence pointing to the economy disinflating,” said Andrew Bell, chief executive of Witan Investment Trust.
Stocks sensitive to consumer spending rose in Europe and Asia after China announced it would resume outbound group travel to a list of 78 countries, after having closed its borders for nearly three years during the pandemic.
The Stoxx Europe Luxury 10 index gained 1.7 per cent as investors expected demand for goods to rise once consumers of the world’s second-largest economy start to travel.
Japan’s Topix rose 0.9 per cent. South Korea’s Kospi fell 0.1 per cent but the declines were offset by gains for travel and leisure companies.
European natural gas prices dropped 7 per cent in Amsterdam after two Australian producers of liquefied natural gas held talks with unions on Thursday to try to stave off a strike that could disrupt global supplies.
The futures price on the Title Transfer Facility, the European benchmark, rose 40 per cent on Wednesday to its highest point since mid-June on fears that the strike would raise prices for buyers in the EU.
Chinese equities were muted in reaction to a US executive order restricting investment into the country’s quantum computing, advanced chip and artificial intelligence industries.
US president Joe Biden on Wednesday announced an order that will block some types of investment into the three Chinese sectors and require companies to declare others. China’s CSI 300 gained 0.2 per cent while Hong Kong’s Hang Seng was flat.
