3-13-18 9:38 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 

U.S. stocks were poised to open higher Tuesday after the latest round of inflation data showed consumer prices rose modestly in February and President Donald Trump said he would nominate CIA director Mike Pompeo as secretary of state to replace Rex Tillerson.

Futures pointed to 0.3% opening gains for the S&P 500 and the Dow Jones Industrial Average, after both slipped Monday.

Consumer prices rose moderately in February, although at a slightly slower pace than in the prior month. The consumer-price index, which measures what Americans pay for everything from shampoo to hotel stays, rose 0.2% in February after climbing a seasonally adjusted 0.5% in January, the Labor Department said. Economists surveyed by The Wall Street Journal expected a 0.2% increase.

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 inflation data was released against a fraught trading backdrop, with the Trump's administration'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."

Stock futures pulled back slightly on word of Mr. Tillerson's departure. He has had public and private differences with Mr. Trump over key national-security issues, including the 2015 Iran nuclear agreement, the administration's talks with North Korea, a dispute among Persian Gulf countries and the Paris climate accord.

The yield on U.S. 10-year Treasurys edged down to 2.838% from 2.870% late Monday. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was up less than 0.1%.

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.

Elsewhere, 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.

Utility and energy companies in the U.S. were on course to mirror gains in Europe, with Alliant Energy 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.

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 09:38 ET (13:38 GMT)

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