U.S. equity index futures rose on Thursday, ahead of key U.S. inflation data that could determine how much further the Federal Reserve’s policy-tightening cycle will run.
Futures contracts on the S&P 500 were up 0.5 per cent as of 5:20 a.m. in New York, while those on the Nasdaq 100 gained 0.3 per cent. The benchmark index had tumbled to its lowest since November 2020 yesterday, as concerns mounted about the impact of hawkish Fed policy, especially on rate-sensitive sectors such as semiconductors. Europe’s Stoxx 600 gauge reversed an earlier loss to rise 0.2, while on currency markets, the dollar slipped.
Any sign that price pressures remain elevated may send markets into sell mode, as on Wednesday, when an above-forecast producer prices reading erased a tentative stock rally. It would also boost Treasury yields and the dollar, potentially adding to its 15 per cent year-to-date gain. “Given the negative bond and equity moves over the last month, the potential for reversals of all of these moves on a soft CPI is significant,” Adam Cole, chief currency strategist at RBC Europe in London, wrote in a research note.
Chip stocks were under pressure after chip-gear maker Applied Materials Inc. slashed fourth-quarter earnings forecast, citing the Biden administration’s new chip export control rules, while Taiwan Semiconductor Manufacturing Co. slashed its 2022 capital spending target.