# Shares steady, dollar gains ahead of U.S. inflation data
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-02-13
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Global Shares Steady as Dollar Rises Ahead of US Inflation
Meta Description: Stay informed on global interest rates and geopolitical uncertainty with the latest update from Wayne Cole and Amanda Cooper at Reuters.
URL: https://financedigest.com/shares-steady-dollar-gains-ahead-of-u-s-inflation-datahtml

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By Wayne Cole and Amanda Cooper

LONDON/SYDNEY (Reuters) – Global shares steadied, while the dollar rose on Monday, ahead of U.S. [inflation data that could define the outlook](https://www.financedigest.com/european-shares-set-for-weekly-gain-on-u-s-inflation-outlook.html "European shares set for weekly gain on U.S. inflation outlook") for global interest rates, while news that the U.S. air force had shot down another airborne object [created some geopolitical uncertainty](https://www.financedigest.com/banning-russian-aluminium-would-create-uncertainty-about-lmes-role-rusal.html "Banning Russian aluminium would create uncertainty about LME’s role -Rusal").

Officials declined to say whether this object, which was spotted along the Canadian border and is the fourth to be shot down this month, resembled the large white Chinese balloon that was shot down earlier in February.

Equities rallied over the first weeks of 2023, buoyed by enthusiasm over the prospect of a peak in [inflation – and rates](https://www.financedigest.com/uk-inflation-rate-unexpectedly-rises-to-10-4-in-february.html "UK inflation rate unexpectedly rises to 10.4% in February") – as well as evidence of ongoing U.S. growth that has [suggested the economy](https://www.financedigest.com/stocks-yields-fall-data-suggests-u-s-economy-cooling.html "Stocks, yields fall; data suggests U.S. economy cooling") could be in for a soft landing.

But that optimism ran into a brick wall the week before last when the Federal [Reserve reiterated its message that the war on inflation](https://www.financedigest.com/oil-prices-dip-on-u-s-crude-reserve-release-inflation-pressure.html "Oil prices dip on U.S. crude reserve release, inflation pressure") is not over, and after the January jobs report depicted a red-hot labour market.

The MSCI All-World index, which [gained almost 10% in the first five weeks of the year](https://www.financedigest.com/hong-kong-home-prices-drop-15-6-in-2022-snap-13-years-of-gain.html "Hong Kong home prices drop 15.6% in 2022, snap 13 years of gain"), fell by nearly 1.5% last week. It was last flat on the day at 646.59 points.

U.S. [data on consumer prices and retail sales this week could prove a key catalyst for near-term direction](https://www.financedigest.com/should-insurers-buy-data-direct-from-their-customers.html "Should insurers buy data direct from their customers?") for the markets, with much resting on whether inflation continued to slow in January.

Median forecasts are for [headline and core](https://www.financedigest.com/boes-mann-falling-headline-inflation-high-core-make-policy-difficult.html "BoE’s Mann: Falling headline inflation, high core, make policy difficult") consumer prices to rise 0.4% for the month, with sales rebounding by 1.6%.

Risks could be to the upside given a re-analysis of seasonal factors released last week saw [upward revisions](https://www.financedigest.com/french-inflation-revised-upwards-in-february-to-7-3-final-figures.html "French inflation revised upwards in February to 7.3% – final figures") to CPI in December and November. That lifted [core inflation](https://www.financedigest.com/euro-zone-inflation-eases-in-feb-but-core-prices-pick-up.html "Euro zone inflation eases in Feb but core prices pick up") on a three-month annualised basis to 4.3%, from 3.1%.

There were also changes to the weightings for shelter costs and used [car prices](https://www.financedigest.com/3-tricks-to-get-a-better-price-when-selling-your-car.html "3 Tricks To Get a Better Price When Selling Your Car") which might bias the CPI higher.

Markets have again tripped up over their over enthusiasm for a Fed and other central bank rate pivots, with this week’s CPI and retail sales [expected to suggest that inflation](https://www.financedigest.com/dollar-drops-as-inflation-cools-more-than-expected.html "Dollar drops as inflation cools more than expected") has picked up in month-on-month terms and that U.S. [consumer spending is proving rather more resilient,” ADM Investor](https://www.financedigest.com/investors-warn-big-consumer-firms-over-price-hikes-as-competitors-gain.html "Investors warn big consumer firms over price hikes as competitors gain") Services chief global economist Marc Ostwald said.

In Europe, shares rose, led by [gains in industrial and defence stocks](https://www.financedigest.com/stocks-mixed-dollar-gains-after-robust-inflation-jobs-data.html "Stocks mixed, dollar gains after robust inflation, jobs data"), pushing the STOXX 600 up 0.3%. The index fell almost 1% last week.

U.S. stock index futures rose between 0.1-0.2%.

Markets have already sharply raised the profile for future tightening by the Federal Reserve, with rates now [seen peaking up around 5.15% and cuts](https://www.financedigest.com/icrc-to-cut-some-1500-jobs-as-humanitarian-budgets-seen-sliding.html "ICRC to cut some 1,500 jobs as humanitarian budgets seen sliding") coming later and slower.

There is also a full slate of Fed officials speaking this [week to provide a timely reaction to the data](https://www.financedigest.com/dollar-dips-ahead-of-inflation-data-later-this-week.html "Dollar dips ahead of inflation data later this week").

[Yields on 10-year Treasuries](https://www.financedigest.com/wall-st-flutters-treasury-yields-ease-as-powell-resumes-testimony.html "Wall St flutters, Treasury yields ease as Powell resumes testimony") are at five-week highs of 3.75%, having jumped 21 basis points last week, while two-year yields hit 4.51%.

That shift helped stabilise the dollar, especially against the [euro which slipped 1.1% last week and extended the retreat on Monday to a five-week low](https://www.financedigest.com/euro-rises-after-spanish-cpi-dollar-slips-towards-8-mth-low.html "Euro rises after Spanish CPI, dollar slips towards 8-mth low") of $1.0656. That was well away from its [early February](https://www.financedigest.com/early-start-to-severe-weather-season-takes-its-toll-on-us-economy-in-february.html "Early start to severe weather season takes its toll on US economy in February") high of $1.0987.

The [dollar also got a leg up on the yen](https://www.financedigest.com/yen-sinks-as-rates-outlook-diverges-nz-dollar-tumbles.html "Yen sinks as rates outlook diverges; NZ dollar tumbles") on reports Japan’s government was likely to appoint academic Kazuo Ueda as the next Bank of Japan governor.

The surprise news sparked speculation about an [early end](https://www.financedigest.com/analysis-investors-stick-to-bets-on-early-end-to-ecb-hikes-as-uncertainty-grows.html "Analysis-Investors stick to bets on early end to ECB hikes as uncertainty grows") to the BOJ’s super-easy policies, though Ueda himself later said it was appropriate to maintain the current stance.

The [dollar was last up almost 0.8% at 132.40 yen](https://www.financedigest.com/aussie-dollar-firm-as-bonds-tumble-yen-looks-past-boj.html "Aussie dollar firm as bonds tumble, yen looks past BOJ"), after bouncing from a trough of 129.80 on Friday.

The rise in yields and the [dollar weighed on gold](https://www.financedigest.com/stocks-and-gold-cheer-u-s-inflation-picture-while-dollar-slides.html "Stocks and gold cheer U.S. inflation picture, while dollar slides"), which fell 0.3% to $1,858.30 an ounce compared to an early February peak of $1,959. \[GOL/\]

Oil prices ran into fresh selling, having [jumped on Friday when Russia said it planned to cut its daily output by 5% in March after the West imposed price caps on Russian oil](https://www.financedigest.com/oil-jumps-on-lower-than-expected-us-inflation-data.html "Oil jumps on lower-than-expected US inflation data") and oil products. \[O/R\]

Brent crude fell almost 1% to $85.54 a barrel, while U.S. futures fell 1.1% to $78.89.

(Reporting by Wayne Cole; Editing by Shri Navaratnam and Mark Potter)


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