# Stocks and gold cheer U.S. inflation picture, while dollar slides
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-04-13
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Gold and Stocks Rise as Dollar Falls
Meta Description: Discover how stocks and gold react to U.S. inflation data, with global shares on the up and dollar nearing two-month lows.
URL: https://financedigest.com/stocks-and-gold-cheer-u-s-inflation-picture-while-dollar-slideshtml

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# Stocks and gold cheer U.S. inflation picture, while dollar slides

By Amanda Cooper

LONDON (Reuters) -Global shares rose on Thursday, while the dollar held near two-month lows after U.S. [inflation data](https://www.financedigest.com/oil-jumps-on-lower-than-expected-us-inflation-data.html "Oil jumps on lower-than-expected US inflation data") suggested the Federal Reserve may soon be finished raising interest rates, which in turn kept gold above $2,000 an ounce.

The [euro hit](https://www.financedigest.com/pound-hits-10-month-peak-euro-up-as-dollar-under-pressure.html "Pound hits 10-month peak, euro up as dollar under pressure") a 2-1/2 month high at $1.103. Investors are positive on Europe, where blue-chip stocks hit a two-decade peak on Wednesday, and [reckon Europe’s central](https://www.financedigest.com/stock-pickers-reckon-its-time-to-move-on-from-central-banks.html "Stock pickers reckon it’s time to move on from central banks") bankers will need to be more hawkish longer than their U.S. counterparts to rein in [rising prices](https://www.financedigest.com/oil-prices-rise-on-u-s-drawdown-chinese-fears-weigh.html "Oil prices rise on U.S. drawdown, Chinese fears weigh").

The broader STOXX 600 index rose 0.3%, buoyed by shares in LVMH hitting a [record high after the luxury retailer reported booming sales in China](https://www.financedigest.com/china-records-worlds-first-human-death-from-h3n8-bird-flu-who.html "China records world’s first human death from H3N8 bird flu -WHO") in the first quarter of 2023. London’s FTSE 100 lagged the rest of the region after [data showed the British economy](https://www.financedigest.com/stocks-yields-fall-data-suggests-u-s-economy-cooling.html "Stocks, yields fall; data suggests U.S. economy cooling") stagnated in February.

After long weekends in much of the world, this [week is fairly action-packed in terms of economic data](https://www.financedigest.com/dollar-dips-ahead-of-inflation-data-later-this-week.html "Dollar dips ahead of inflation data later this week"). Still to go are U.S. producer prices and [retail sales](https://www.financedigest.com/uk-retailers-turn-positive-on-sales-hopes-after-bleak-winter.html "UK retailers turn positive on sales hopes after bleak winter"), both of which could help set expectations for what the Fed might do at its May meeting.

If as [expected or lower, this may be enough for markets to start to discount a smaller probability of a Fed rate hike at its May meeting, but it may also require retail sales to fall as expected tomorrow,” ADM Investor](https://www.financedigest.com/wave-of-lawsuits-over-ftx-expected-but-investors-will-face-legal-hurdles.html "‘Wave’ of lawsuits over FTX expected, but investors will face legal hurdles") Services chief global economist Marc Ostwald said.

Tuesday’s read on U.S. [consumer inflation](https://www.financedigest.com/euro-zone-consumers-more-optimistic-on-inflation-ecb-survey-shows.html "Euro zone consumers more optimistic on inflation, ECB survey shows") showed prices barely rose in March. The [annual 5% headline rise](https://www.financedigest.com/ikea-stores-owner-ingkas-annual-operating-profit-rises-9.html "IKEA stores owner Ingka’s annual operating profit rises 9%") for U.S. inflation was the smallest [since May 2021 and down from 9.1% last June](https://www.financedigest.com/uk-mortgage-approvals-hit-lowest-since-june-2020.html "UK mortgage approvals hit lowest since June 2020").

Though with core CPI sticky at an annual 5.6% and minutes from last month’s Fed [meeting showing participants cautious about credit tightening in the wake of banking](https://www.financedigest.com/banking-stability-worries-go-behind-closed-doors-at-imf-world-bank-meetings.html "Banking stability worries go behind closed doors at IMF-World Bank meetings") sector wobbles in March, markets are nervous.

The market view is a bit split on whether it’ll be a ‘hawkish hold’ or a ‘dovish hike’,” Aninda Mitra, head of Asia macro and investment [strategy at BNY Mellon Investment Management](https://www.financedigest.com/time-management-strategies-that-work.html "Time management strategies that work"), referring to next month’s Fed meeting.

Whichever way you look at it, it’s probably not going to be a series of hikes, it’s probably going to be one more to [hit the peak](https://www.financedigest.com/australia-covid-numbers-hit-a-peak-as-omicron-outbreak-strains-domestic-politics.html "Australia COVID numbers hit a peak as Omicron outbreak strains domestic politics") before you start to reassess, you either reassess now, or you hike and then reassess,” he said.

The dollar index was down 0.2%, [near its lowest in two months](https://www.financedigest.com/oil-holds-steady-near-four-month-high-on-opec-cuts.html "Oil holds steady near four-month high on OPEC+ cuts"), while U.S. stock futures rose 0.1-0.2%, suggesting a modest rally at the open.

However, given the [Fed’s concern about banks](https://www.financedigest.com/analysis-china-central-bank-under-pressure-to-ease-is-hemmed-in-by-inflation-fed-jitters.html "Analysis-China central bank, under pressure to ease, is hemmed-in by inflation, Fed jitters"), much of the week’s focus will fall on earnings from Citi, Wells Fargo and JP Morgan Chase due on Friday.

It is an ‘if’ monetary policy world, that is, wait and see about banking and financial conditions,” said Sam Rines, [managing director at research firm](https://www.financedigest.com/exclusive-crypto-giant-binance-moved-400-million-from-u-s-partner-to-firm-managed-by-ceo-zhao.html "Exclusive-Crypto giant Binance moved 0 million from U.S. partner to firm managed by CEO Zhao") CORBŪ in Texas. [“Banking sector](https://www.financedigest.com/sterling-rises-as-receding-bank-sector-worries-lift-sentiment.html "Sterling rises as receding bank sector worries lift sentiment") issues are explicitly part of the reaction function now.

Two-year [Treasury yields](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") were steady at 3.962% after dropping more than 8 basis points on Wednesday. More tellingly, as [investors place more of a chance on the European Central Bank](https://www.financedigest.com/stocks-rise-after-bank-sale-fuels-investor-risk-appetite.html "Stocks rise after bank sale fuels investor risk appetite") raising rates for longer, the gap between 10-year U.S. Treasury yields and 10-year Bund yields reached its narrowest in two years, reflecting the steeper [rise in German yields](https://www.financedigest.com/global-equities-gain-as-rising-bond-yields-pressure-gold.html "Global equities gain, as rising bond yields pressure gold").

## NO BLOW-UPS, FOR NOW

Goldman Sachs’ chief economist Jan Hatzius sounded upbeat, noting risks of an outright banking [crisis have declined sharply since no further banks](https://www.financedigest.com/how-the-2023-banking-crisis-unfolded.html "How the 2023 banking crisis unfolded") have blown up since the weekend of the collapse of Silicon Valley Bank a month ago.

Still, there is pressure and warning signs, particularly for regional lenders, with Rines pointing to the [Bank of South Carolina which noted “precipitous increases”](https://www.financedigest.com/banking-and-fintech-convergence-will-increase-reliance-on-it.html "Banking and Fintech Convergence will Increase Reliance on IT") in deposit costs and thin margins in its first-quarter earnings this week.

Elsewhere, gold rose 0.64% to $2,027 an ounce, [near its highest for a year](https://www.financedigest.com/nearly-60-of-people-are-worried-about-their-data-being-used-by-mobile-apps-but-continue-to-download-as-many-as-100-apps-over-the-course-of-a-year.html "Nearly 60% of people are worried about their data being used by mobile apps, but continue to download as many as 100 apps over the course of a year"). A weaker [dollar and the prospect of a decline in rates](https://www.financedigest.com/yen-sinks-as-rates-outlook-diverges-nz-dollar-tumbles.html "Yen sinks as rates outlook diverges; NZ dollar tumbles") means gold, which does not bear any kind of interest of its own, can compete more effectively for investor money, especially if inflation is proving persistent, given its reputation as a hedge against rising price pressures.

The Aussie [dollar rose 0.6% on the back](https://www.financedigest.com/dollar-advances-as-strong-u-s-data-backs-higher-rates-backdrop.html "Dollar advances as strong U.S. data backs higher rates backdrop") of surprise surges in both Chinese exports, which rose 14.8% compared with last March, and domestic Australian jobs.

China’s major stock indexes were slightly in the red, with analysts saying an unexpected rise in [March exports](https://www.financedigest.com/u-s-oil-exports-to-europe-hit-record-in-march-on-steep-discounts.html "U.S. oil exports to Europe hit record in March on steep discounts") was unlikely to be sustained given softening global demand.

Chinese tech stocks slid after the Financial [Times reported SoftBank was selling](https://www.financedigest.com/best-selling-books-of-all-time.html "Best selling books of all time") down its Alibaba stake, on the heels of Netherlands investor Prosus flagging some selling of its Tencent stake on Wednesday. Alibaba shares fell by as much as 5% at one stage, but later pared [losses to close](https://www.financedigest.com/galois-capital-flagship-fund-to-close-after-ftx-losses.html "Galois Capital flagship fund to close after FTX losses") 2% lower. In U.S. premarket trading they were up about 1.8%.

(Additional reporting by Tom Westbrook and Ankur Banerjee in Singapore; Editing by Shri Navaratnam, Kim Coghill, Peter Graff)


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