Global shares trend higher with focus on inflation data

Global shares were mostly higher Wednesday, as investors watched for key inflation data likely to influence the Federal Reserve's stance on interest rates.

France's CAC 40 added 0.4 per cent in early trading to 7,420.32. Germany's DAX edged up 0.4 per cent to 15,709.27. Britain's FTSE 100 surged 0.5 per cent to 7,825.05. The future for the Dow industrials gained nearly 0.2 per cent and the S&P 500 future contract added nearly 0.1 per cent.

In Asian trading, Japan's benchmark Nikkei 225 rose 0.6 per cent to finish at 28,082.70. Australia's S&P/ASX 200 added 0.5 per cent to 7,343.90. South Korea's Kospi edged up 1 per cent to 2,550.64..

Hong Kong's Hang Seng index lost 0.9 per cent to 20,309.86 and the Shanghai Composite index added 0.4 per cent to 3,327.18.

ALSO READ: US CPI Data for March: Release date, time, all you need to know 

Broader markets remain laser-focused on this week's critical inflation data as market participants attempt to tease out the state of the economy and the course the Fed might take from here,? Stephen Innes, managing partner at SPI Asset Management, said in a report.

The biggest immediate question for Wall Street has been whether the Federal Reserve will keep hiking interest rates in its attempt to get high inflation under control. It's already raised rates at a furious pace over the last year, enough to slow some areas of the economy and for strains to appear in the banking system.

Economists expect Wednesday's report on consumer inflation to show it slowed to 5.2 per cent in March from 6 per cent in February. That's continued progress since inflation peaked last summer, but still well above the Fed's target.

A higher reading than expected would likely raise expectations the Fed will raise rates by another quarter of a percentage point at its next meeting in May. Higher rates can undercut inflation, but in slowing the economy they raise the risk of a recession and hurt prices for stocks and other investments.

ALSO READ: US CPI Data for March: Release date, time, all you need to know 

Tim Waterer, chief market analyst at Kohle Capital Markets, said traders were generally upbeat during Asian trading.

But it's fair to say that the buoyant mood also comes with an air of caution given the importance and potentially policy-influencing impact of the US inflation data this week,? he said.

On Wall Street on Tuesday, the S&P 500 had its smallest one-day move in more than a year, slipping 0.17 points, or less than 0.1 per cent. Most of the stocks in the index rose, as did the Dow Jones Industrial Average, which gained 0.3 per cent. The Nasdaq composite slipped 0.4 per cent.

Bond traders have been jittery over the Fed possibly going too far on rates and then having to cut them as soon as this summer in order to prop up the economy. The stock market has remained more resilient, helped by hopes the Fed could thread the needle and raise rates just enough to stifle inflation without causing a severe downturn.

Still-high inflation is one of the reasons analysts expect this upcoming earnings reporting season to show the worst drop since the depths of the pandemic in 2020. A bunch of banks will help kick off the earnings reporting season when they tell investors on Friday how much they earned during the first three months of the year.

Investors will get updates on what CEOs say about current and upcoming conditions. One fear is that banks in particular could pull back on their lending following all the turmoil in their sector, caused in part by the past year's swift leap in interest rates.

If they do cut off lending to businesses, that could further slow the economy and raise the risk of a recession.

In energy trading, benchmark US crude shed 15 cents to USD 81.38 a barrel in electronic trading on the New York Mercantile Exchange. It advanced USD 1.79 per barrel to USD 81.53 per barrel. Brent crude, the international standard, fell 8 cents to USD 85.53 a barrel.

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