Wall Street futures tick higher ahead of US inflation update

By JOE McDONALD and MATT OTT
AP Business Writers

Wall Street inched higher ahead of an inflation update Friday that could influence the Federal Reserve and its decision on interest rates at its next meeting.

Futures for the benchmark S&P 500 index inched up about 0.1% and the Dow Jones Industrial Average rose 0.2% before the opening bell.

On Friday, the Commerce Department releases its consumer spending report that contains a measure of inflation — personal consumptions expenditures, or PCE — that is closely watched by the Federal Reserve.

A softer inflation reading would be a “signal to continue with the risk-on theme,” said Tim Waterer of Kohle Capital Markets in a report.

Traders were rattled by this month’s bank failures but regulators appear to have calmed fears by promising lending measures if needed to keep other institutions stable after repeated rate hikes caused prices of bonds and other assets on their books to fall.

Markets have shifted focus back to uncertainty about the global economic outlook as the Fed and other central banks try to extinguish inflation. Prices for some commodities have softened and increases in many countries have slowed, but inflation remains a threat to stability in many emerging markets.

On Friday, Egypt’s central bank raised interest rates as the continues battles surging prices and a depreciating currency. The most basic lending rate increased to 18.25% from 16.25% to help quash spiraling inflation, which hit a 32.9% annual rate in February.

Traders have begun betting the Fed will be forced to cut rates as early as mid-year to shore up economic growth. That is despite statements by Fed officials that they plan to raise rates one more time before holding them steady into at least early 2024.

The Fed’s key lending rate stands at a range of 4.75% to 5%, up from close to zero at the start of last year.

Inflation in the 20 countries that use the euro slowed to 6.9% in March from 8.5% the month before. Food costs are still on the rise, but energy prices fell, making a sharp turnaround after months of punishing increases, according to data released Friday by the European Union’s statistics agency, Eurostat.

At midday in Europe, the FTSE 100 in London gained 0.2%, the DAX in Frankfurt rose 0.4% and the CAC 40 in Paris advanced 0.5%.

In Asia, the Shanghai Composite Index rose 0.4% to 3,272.86 after an official survey showed China’s factory activity grew at a slower pace in March but was stronger than expected following the end of anti-virus restrictions. The Hang Seng in Hong Kong added 0.4% to 20,400.11.

The Nikkei 225 in Tokyo advanced 0.9% to 28,041.48 after government data showed factory output rebounded and retail sales rose in February.

The Kospi in Seoul added 1% to 2,476.86 after government data showed factory output declined 3.2% from the previous month in February. Sydney’s S&P-ASX 200 was 0.8% higher at 7,177.80.

India’s Sensex advanced 1.7% to 58,954.14. New Zealand and Jakarta declined while Singapore and Bangkok advanced.

Shares of Richard Branson’s satellite launch company Virgin Orbit tumbled further after the company said it is letting go of almost its entire work force. That company is struggling to secure funding following a failed mission three months ago.

Virgin Orbit, based in Long Beach, California, will cut 675 jobs, about 85% of its workforce, according to a Friday filing with the U.S. Securities and Exchange Commission. Shares tumbled nearly 40% in off-hours trading and have lost about 80% of their value this year.

In energy markets, benchmark U.S. crude gained 50 cents to $74.87 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.40 on Thursday to $74.37. Brent crude, the price basis for international oil trading, picked up 30 cents to $78.90 per barrel in London. It advanced 99 cents the previous session to $79.27.

The dollar gained to 133.19 yen from Thursday’s 132.47 yen. The euro declined to $1.0869from $1.0904.

Wall Street rose Thursday as worries about the global financial system eased following the collapse of two U.S. banks and one in Switzerland.

On Thursday, the S&P 500 index rose 0.6%. The Dow gained 0.4% and the Nasdaq composite added 0.7%.

——

McDonald reported from Beijing; Ott reported from Silver Spring, Md.