(Bloomberg) — Stocks traded mixed ahead of key U.S. inflation data on Wednesday as concerns grow that President-elect Donald Trump’s proposed tariffs and his picks for key positions could spark a resumption of price growth.
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The Stoxx 600 index recorded small movements in the European open session. The S&P 500 and Nasdaq 100 futures fell, as traders digested Trump’s Cabinet appointments, which will likely follow “America First” policies on borders, trade, national security and the economy. The Bloomberg Dollar Spot Index rose with Treasury yields.
US data due later today may reinforce concerns about accelerating inflation, with analysts predicting that the overall CPI may rise by 0.2% for the fourth month. With the new US administration expected to pursue inflationary policies such as tariffs, traders are now pricing in lower interest rate cuts by the Fed next year.
The Fed is easing policy in an environment where inflation is already slightly above target in the United States, Henry Allen, a strategist at Deutsche Bank, told Bloomberg TV.
“You add on top of that the risk of tariffs in the next couple of years and fiscal stimulus, and if you’re trying to build an inflationary recipe — it’s very similar to what we’re seeing now,” he said.
Minneapolis Federal Reserve Bank President Neel Kashkari said on Tuesday that he will watch US inflation data closely to determine whether another interest rate cut is appropriate at the US central bank’s December meeting. Traders expect about two cuts in US interest rates during the month of June, compared to about four cuts at the beginning of last week.
The US election results are still reverberating around the world, with MSCI’s gauge of ex-US stocks recording its worst day since the global debacle on August 5. The index of developing market currencies lost more than 1% after the vote, coming close to erasing this year’s gains.
In currencies, the yen fell below 155 yen to the dollar for the first time since July, raising the risk of Japan entering the currency market in an attempt to slow the currency’s decline. Bitcoin fell after a chart-busting rally sent the digital asset soaring to nearly $90,000 for the first time.
Elsewhere, oil held near its lowest levels this month, with demand forecasts in focus after OPEC cut its forecast on a China slowdown. Rose gold.
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