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Equities

Global markets held steady after data showed that U.S. inflation was flat in May, helping to bolster investor hopes that the Federal Reserve will begin cutting interest rates in September.

The Fed’s preferred inflation measure, the personal consumption expenditures (PCE) index, showed that annual growth in prices was 2.6 per cent in May, as economists had expected, down from 2.7 per cent in April.

The tech-heavy Nasdaq and the benchmark S&P 500 opened higher on the news. The S&P 500 climbed 0.10 per cent to 5,488.48 and the Nasdaq Composite gained 0.18 per cent to 17,891.10. The Dow Jones Industrial Average opened 0.18 per cent lower at 39,092.39.

The S&P/TSX composite index was up 0.14 per cent to 21,973.10 at the open, aided by rising crude prices.

Given the U.S. inflation numbers, “combined with yesterday’s softish growth data, we could see the Fed doves remain in charge of the market,” Ipek Ozkardeskaya, senior analyst of Swissquote Bank, wrote in a note. That “could help broaden the U.S. stock rally to non-tech sectors, and toward the reflation-friendly European markets.”

Overseas, the pan-European STOXX 600 advanced 0.45 per cent in morning trading. Britain’s FTSE 100 gained 0.08 per cent, Germany’s DAX added 0.29 per cent while France’s CAC 40 slid 0.69 per cent.

In Asia, Japan’s Nikkei closed 0.61 per cent higher, while Hong Kong’s Hang Seng was up 0.01 per cent.

Commodities

Oil prices were headed for a third straight weekly jump.

Brent crude oil futures rose 0.4 per cent to US$86.77 a barrel, while U.S. West Texas Intermediate crude futures gained 0.38 per cent to US$82.05 a barrel.

“Crude oil edged higher despite weak near-term fundamentals,” said ANZ analysts, referring to unexpected gains in U.S. crude inventories despite expectations of a drawdown during the summer peak demand.

In other commodities, gold prices edged higher. Spot gold was steady at US$2,328.85 an ounce. U.S. gold futures rose 0.1 per cent to US$2,339.60.

Currencies and bonds

The Canadian dollar strengthened against its U.S. counterpart.

The day range on the loonie was 72.80 US cents to 73.12 US cents in the early premarket period. The Canadian dollar was down about 0.57 per cent against the greenback over the past month.

The U.S. dollar index, which weighs the greenback against a group of currencies, was last down 0.02 per cent to 105.88.

The euro was last down at US$1.0701. The British pound gave back 0.03 per cent at US$1.2636.

In bonds, the yield on the U.S. 10-year note was last down 0.02 per cent at 4.273 per cent.

Meanwhile, the yen’s slide to a 38-year low fuelled expectations of intervention by the Japanese authorities to stem the weakness.

Economic news

Canada’s monthly real GDP increased 0.3 per cent April, matching expectations, and the economy likely expanded further in May, data showed.

U.S. personal spending and income for May. Spending increased 0.2 per cent.

U.S. core PCE Price Index for May. Prices were unchanged from April and up 2.6 per cent year-over-year.

(9:45 a.m. ET) U.S. Chicago PMI

(10 a.m. ET) U.S. University of Michigan Consumer Sentiment Index for June.

With Reuters and The Canadian Press