3-13-18 8:41 AM EDT | Email Article
By David Hodari 
   -- U.S. inflation data in focus 
   -- U.S. futures point to opening gains 

   -- Trading calm in Europe, Asia-Pacific 

Global stocks showed cautious optimism on Tuesday, as investors paused ahead of the release of fresh U.S. inflation data.

U.S. futures pointed to 0.2% opening gains for the S&P 500 and the Dow Jones Industrial Average, after both slipped on Monday.

Utility and energy companies were on course to mirror gains in Europe, with Alliant Energy Corp. up 3.2% and ConocoPhillips up 1.5% in premarket trade. Elsewhere, shares in telecommunications firm Qualcomm were set to fall 5.7% after President Donald Trump on Monday blocked Broadcom's $117 billion hostile takeover bid on national security grounds.

The Stoxx Europe 600 was flat, after Asia-Pacific indexes shrugged off early pressure. The Stoxx 600's energy and utility sectors rose, with utility firm E.ON climbing 4.5% after reporting Tuesday that it swung to a profit in 2017 and providing an update on its asset-swap deal with rival RWE.

The U.S. is set to release consumer-price index data later Tuesday, and investors will be on the lookout for signs of rising inflation to help gauge whether the Federal Reserve would hasten its planned interest-rate increases.

A lack of inflationary jitters during 2017 allowed U.S. stock indexes to leap to multiple records early in 2018, while investors kept long-term bond yields subdued.

Since the start of February, however, rising inflation in both the U.S. and Europe has prompted investors to second-guess central-bank guidance, fueling speculation about tighter monetary policy.

The yield on U.S. 10-year Treasurys had last edged down to 2.867% from 2.870% late Monday. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was last up 0.2%, and up 0.4% over the past five days.

The dollar could rise further still "if inflation continues to surprise to the upside at the start of this year," said Lee Hardman, a currency analyst at MUFG in a note.

However, Tuesday's inflation data could reaffirm some analysts' view that price rises have remained tepid in recent months. Economists surveyed by The Wall Street Journal expect the core consumer-price index to increase 1.9% in February from a year earlier, up from January's increase of 1.8%.

"The [Federal Reserve] is probably still on course to raise rates three times this year, and I don't think they'll revise their dots up because markets have reacted fairly well to their strategy so far and the economy has continued to improve," said Silvia Dall'Angelo, senior economist at Hermes Investment Management.

"Inflation is still running below target and that's been the case for some time. There's a case for inflation to run on the high side to make up for the past few years. Plus we're seeing an increased risk from protectionism and broad retaliation would be a reason for the Fed to slow down," Ms. Dall'Angelo added.

Those inflation data will be released against a fraught trading backdrop, with Mr. Trump's announcement of tariffs on steel and aluminum imports having provoked rebukes from China and the European Union in recent days. How those trading partners now respond may have broader implications for global economic growth, analysts say.

"Trade and GDP growth are intimately linked. You've seen a big pickup in trade in the past six months, but now, that growth rate is slowing," said Edmund Shing, global head of equity derivative strategy at BNP Paribas. "The chances of a global recession in the next year or two are already rising and if you add to that a slowdown in the rate of trade -- not just a slowdown in trade growth -- it could have repercussions for global economies."

In Asia, Japanese stocks closed up 0.7%, paring earlier losses. Gains in the yen softened, with investors largely unperturbed by calls for the resignation of Finance Minister Taro Aso over his ministry's alleged involvement in altering documents in a controversial land sale involving the wife of Prime Minister Shinzo Abe.

Tech stocks climbed after the Nasdaq's second straight record close overnight. Samsung Electronics was up 3.9% in South Korea, with the country's main benchmark up 0.4%. Taiwan's Taiex gained 0.9%, buoyed by gains for Apple suppliers.

Shanghai's composite index was down 0.5% after news that China plans to merge its banking and insurance regulators, while the Shenzhen composite index was down 0.7%. Australia's S&P/ASX 200 slipped 0.4% on weakness in major mining and oil stocks.

Kenan Machado contributed to this article.

Write to David Hodari at David.Hodari@dowjones.com


(END) Dow Jones Newswires

March 13, 2018 08:41 ET (12:41 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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