Stocks moderate their inflation expectations due to the blow to copper

  • S&P futures up 0.9%, European stocks gain 1.5%
  • MSCI Global Shares Target 2.5% Weekly Gain
  • Copper falls more than 7% in the week, oil falls 2%
  • German 10-year bond yield falls 4 bps

LONDON, June 24 (Reuters) – Global stocks were headed for their first weekly gain in a month and Wall Street was set to open higher on Friday on hopes that falls in copper and other commodities could curb runaway inflation. .

The week has been marked by sharp declines in commodities on concerns that the global economy looks shaky and interest rate hikes will hurt growth, which in turn is prompting traders to lower expectations for inflation and reduce some bets on the size of the increases.

“Inflation will remain elevated and above target, but it is increasingly likely to start to peak in the coming months,” said Andrew Hardy, investment manager at Momentum Global Investment Management.

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“Markets could take that reasonably well, there is potential for recovery later in the year.”

US S&P futures rose 0.9% and the MSCI World Stock Index (.MIWD00000PUS) it rose 0.5% on the day and 2.5% on the week, setting up for the first weekly gain since May.

Copper, a gauge of economic output with its wide range of construction and industrial uses, is headed for its steepest weekly decline since March 2020. It fell in London and Shanghai on Friday and is down more than 7% for the week. .

Tin fell nearly 15% on Friday, taking losses this week to a record 25%, as investors fear slowing economic growth will reduce demand for the solder metal for electronics.

Brent crude futures rose more than $1 to $111.28 a barrel on Friday, but are still down 2% on the week and 10%

on the month, while benchmark grain prices sank, with Chicago wheat falling more than 8% for the week.

Gold rose 0.2% to $1,826.30 an ounce, but headed for a second straight weekly decline.

Price declines have offered some relief to equities as energy and food have been the drivers of inflation.

european stocks (.STOXX) jumped 1.5%, on track to post small weekly gains. FTSE of Great Britain (.FTSE) rose 1.3%, also showing a small rebound on the week.

“For long-term investors, the story hasn’t changed: Falling markets offer more attractive valuations in high-quality companies with a competitive advantage,” said Lewis Grant, senior portfolio manager for global equities at Federated Hermes.

The Federal Reserve’s commitment to rein in the highest inflation in 40 years is “unconditional”, US central bank chief Jerome Powell told lawmakers on Thursday, while acknowledging that interest rates strongly higher can increase unemployment. read more

Germany is headed for a gas shortage if Russian gas supplies remain as low as they are now due to the Ukraine conflict, and certain industries may have to close if there isn’t enough for the winter, Economy Minister Robert Habeck told reporters. Der Spiegel magazine on Friday. read more

Ukraine said Russian forces had “completely occupied” a town south of the strategically important city of Lysychansk in the eastern Lugansk region as of Friday. read more

Bonds rallied on hopes bets on aggressive rate hikes would have to be scaled back, with German two-year yields falling 26 basis points on Thursday in their biggest drop since 2008.

The German 10-year yield was down 4 bps on Friday after falling 29 bps on Thursday and headed for its first weekly decline since mid-May.

However, the benchmark 10-year Treasury yield gained 4 bps to 3.1076%, after falling 7 bps on Thursday.

Bond funds suffered their biggest outflows since April 2020 in the week to Wednesday, while stocks lost $16.8 billion as markets stalled in peak bearish mode, weekly cash flow analysis showed on Friday. BofA.

The US dollar has fallen from 20-year highs last week. The euro gained 0.23% to $1.05470 and the US currency was flat at 135.03 yen.

The battered yen has stabilized this week and received some support on Friday as Japanese inflation exceeded the Bank of Japan’s 2% target for the second month in a row, putting further pressure on its ultra-loose policy stance. read more

MSCI’s broadest index of Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) rose 1.1%, helped by short sellers’ bailout of Alibaba (9988.HK) – which rose nearly 6% – amid signs that China’s tech crackdown is easing.

japan nikkei (.N225) rose 1.2% for a weekly gain of 2%.

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Additional reporting by Brijesh Patel in Bengaluru, Tom Westbrook in Singapore, and Sam Byford in Tokyo; edited by Jacqueline Wong, John Stonestreet and Andrew Heavens

Our standards: The Thomson Reuters Trust Principles.

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