Title: Stocks extend winning run on optimism inflation peaking

Sep 13, 2022 02:05AM ET

By: AnalysisWatch

Asian stocks advanced on Tuesday and the dollar steadied below a recent peak ahead of U.S. inflation data that some strategists said could offer another signal that inflation has peaked.

S&P 500 futures and Nasdaq futures held firm, while European stock futures dipped, setting the stage for a subdued start for European markets.

MSCI's broadest index of Asia-Pacific shares ex-Japan rose 0.8%, led by a 2.6% jump for South Korea's KOSPI. Japan's Nikkei put on 0.2%.

The MSCI gauge has risen for four days in a row, bouncing back from two-year lows.

Analysts, however, warned that U.S. core inflation is likely to march on and that the near-term rate implications are unclear.

Interest rate futures imply a 90% chance that the Federal Reserve lifts its benchmark interest rate by 75 basis points at next week's policy meeting - a position that is perhaps most vulnerable to a downside CPI surprise.

U.S. inflation figures are due at 1230 GMT and the consensus is for the core inflation rate last month to have risen 0.3% month-on-month, the same as in July.

The investment banking world is also offering a counterpoint to stock markets' enthusiasm. Goldman Sachs (NYSE:GS) is mulling job cuts, a person familiar with the plans told Reuters.

A KKR-led consortium has told Australia's Ramsay Health Care it will not improve its $14.5 billion cash-and-stock offer for the hospital operator, a move that will likely put a deal on ice.

In currency markets the dollar is off recent peaks. Its index against major peers was steady at 108.16, after falling 0.7% overnight, the largest daily decline since August. Tailwinds from last week's European rate hike have the euro extending a bounce and above parity at $1.0127.

U.S. Treasury yields rose overnight after some lacklustre auctions. Selling was heaviest at the very long end, with the 30-year yield up about 6 bps to around 3.5%.

Benchmark 10-year yields steadied at 3.3425% in Tokyo trade on Tuesday, beneath the two-year yield of 3.5489%.

Gold was steady at $1,722 an ounce.