US stock futures edge up as investors await closely-watched inflation data and keep an eye on Russia-Ukraine tensions
- US futures rose Wednesday, while Treasury yields held multi-year highs ahead of key inflation data.
- Economists expect January US CPI to come in at 7.3%, versus December's 7% print.
US stocks looked set to rise Wednesday after a strong Wall Street session as investors keep a close watch on key inflation data this week and geopolitical uncertainty driven by Russia's military encirclement of Ukraine.
Futures on the Dow Jones were up 0.5% as of 4:45 a.m. ET, while those on the S&P 500 rose 0.6% and the Nasdaq gained 0.8%, suggesting a higher start to trading later in the day.
Market participants are bracing for US consumer inflation data on Thursday and what that might mean for the number and timing of interest rate hikes by the Federal Reserve.
Unless there are any surprises in store, economists on average expect the consumer price index to have risen by 7.3% in January compared to last year, following December's 7% reading.
If inflation accelerated more quickly than that, some analysts expect 10-year Treasury yields to hit 2% for the first time since July 2019. Investors tend to ditch bonds when inflation picks up, as it erodes fixed-income returns over time.
With the exception of the inflation reading, data from the US is relatively thin for the rest of the week.
On the earnings front, close to 60% of the S&P 500 companies have reported results. 77% have beaten expectations despite disappointments from some, according to FactSet data.
The 10-year Treasury yield was relatively steady overnight at 1.925%.
Another factor that seems to be driving gains is a more positive geopolitical backdrop, with the latest meetings between French President Emmanuel Macron and Vladimir Putin raising hopes that there could be de-escalation of tensions between Russia and the West over Ukraine.
Macron said Putin has promised not to escalate the crisis, a situation that seems to have taken some of the geopolitical risk premium out of various assets, Deutsche Bank strategists said.
In Asia, worries of possible rate hikes prompted regional investors to rotate out of growth stocks into more traditional sectors.
The Shanghai Composite rose 0.7% and Tokyo's Nikkei added 1%. Hong Kong's Hang Seng rose 2%.
In Europe, strong gains indicated that equities are coping with the potential impact of gradual monetary tightening.
London's FTSE 100 gained 0.7%. The pan-European Euro Stoxx 600 and Frankfurt's DAX each rose 1.4%.
Oil prices fell as concerns about a further escalation of the Russia-Ukraine conflict appear to have somewhat eased following the latest diplomatic efforts.
Brent crude futures fell 0.4% to $90.46 a barrel and West Texas Intermediate fell 0.3% to $88.99 a barrel.
UBS expects oil prices to hit between $90 to $100 a barrel this year.