US stocks slipped on Tuesday but traders were mostly on the sidelines ahead of the release of crucial inflation data.
Wall Street’s benchmark S&P 500 ended the day down 0.5 per cent while the tech-heavy Nasdaq Composite fell 0.6 per cent.
The moves come ahead of the release of US consumer price data on Wednesday morning, which is expected to show headline CPI rose at an annual rate of 5 per cent in April, unchanged from the previous month, according to economists surveyed by Bloomberg.
Consumer inflation has steadily retreated since last summer and a 5 per cent read would represent the first time the headline figures have stagnated since.
“People are sitting on the sidelines ahead of CPI,” said Andy Brenner, head of fixed income at NatAlliance Securities. “You had a little movement after the Fed and jobs last week and since then stocks haven’t been doing too much.”
The data will be an important part of the Federal Reserve’s calculus at its monetary policy meeting next month. Investors are mixed on whether the Fed will increase interest rates again after lifting them last week to a range of 5 per cent to 5.25 per cent, the 10th increase in 14 months.
Investors were also watching for progress on debt-ceiling discussions with US President Joe Biden set to meet congressional leaders from both parties at the White House amid a deadlock over raising the nation’s borrowing limit. Both sides dismissed calls for a short-term fix ahead of the meeting.
US government bond prices fell, with the yield on interest rate-sensitive two-year Treasuries up 0.03 percentage points to 4.03 per cent. The benchmark 10-year yield, which moves with growth and inflation expectations, rose 0.02 percentage point to 3.52 per cent.
The US dollar index rose 0.3 per cent against a basket of six other currencies.
In Europe, the region-wide Stoxx 600 fell 0.3 per cent as investors expressed concern about the outlook for real estate companies following a year of aggressive interest rate rises.
The Stoxx Europe 600 real estate index lost 2.9 per cent after Sweden-based landlord SBB said it would halt dividend payments and scrap a planned rights issue to preserve capital.
Its shares fell by a quarter after falling 20 per cent on Monday following S&P cutting the company’s credit rating to junk. Swedish rivals fell in Stockholm trading — Sagax by 1.3 per cent and Fastighets AB Balder by 6.8 per cent.
The real estate sector shakeout was led by “the view that weakness in Sweden’s property sector is foreshadowing what is set to come in mainland Europe”, said Simon Harvey, head of FX analysis at Monex Europe.
London’s FTSE 100 fell 0.2 per cent as traders awaited the Bank of England’s next policy meeting on Thursday when the central bank is expected to raise interest rates by 0.25 percentage points to 4.5 per cent, their highest level since 2008.
Hong Kong’s benchmark Hang Seng index fell 2.1 per cent, while China’s CSI 300 was down 0.9 per cent. Japan’s Topix stood out from the rest of the region, rising 1.3 per cent.
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