Global Equities Recovering Ahead of US CPI Data
Global stock markets remain stable, waiting for data on US inflation for February. Investors focus on data on US CPI and retail sales data. US futures were slightly higher ahead of the consumer prices figures. Rising inflation have been a cause of concern for investors as they fear the central bank might raise interest rates at a faster pace.
The US inflation figures will be a key ingredient for the Federal Reserve ahead of its March 20-21 monetary policy meeting. Analysts expect consumer prices to rise 0.2%, weakening from January's 0.5% increase, while core inflation is forecast to inch up 0.2%, a touch slower than a month earlier, when core CPI recorded a 0.3% gain. On a yearly base, core CPI is projected to climb 1.8%, unchanged from the preceding month. Rising inflation would be a catalyst to push the Fed toward raising interest rates at a faster pace than currently expected. Markets widely anticipate the Fed to hike rates by 25 basis points to 1.50%-1-75% at the March meeting.
The other important event today will be the UK Spring Statement. The Chancellor Philip Hammond will unveil the latest economic forecasts from the Office for Budget Responsibility. Hammond is expected to announce that the UK economy grew more than previously expected and tax receipts have also been higher. The Chancellor is expected to reveal that tax receipts are covering day-to-day government spending for the first time since the 2008 financial crisis. Borrowing is expected to be up to £10b lower than expected last year, as a result of the better-than-expected tax revenues. Growth also looks set to be slightly higher than forecast last year, but public debt as a percentage of national income remains well above 80%.