Global Equities Rise on Anticipation of Key US Inflation Report

On Wednesday, the MSCI All Country World Index saw a 0.1% increase, reaching a new high as investors eagerly awaited the release of a key US inflation report. Since hitting a low point in April, the index has surged by almost 6%, thanks to improved risk sentiment due to several factors, including the weakening of the US dollar and a rebound in Chinese equities.

Despite Federal Reserve Chair Jerome Powell’s comments suggesting that interest rates may need to remain elevated for longer to combat inflation, market expectations are that a moderation in inflation is on the horizon. This is largely driven by anticipation that the upcoming inflation report, set to be released on Wednesday, will show a decrease in underlying US inflation for April – marking the first decline in six months.

Investor confidence is growing as they closely monitor the upcoming inflation report for further clues on how the Federal Reserve will approach monetary policy. Similarly, global equities climbed in anticipation of US inflation data before being derailed by a more hawkish stance from the Federal Reserve and escalating tensions between Iran and Israel in March.

Overall, while there are concerns about rising inflation and potential interest rate hikes from central banks around the world, market expectations suggest that global equities will continue to climb as long as there are no major surprises or negative developments on the economic front.