Stocks near flat, dollar dips as focus shifts to US inflation data

GLOBAL MARKETS-Stocks near flat, dollar dips as focus shifts to US inflation data

Updates to 2:45 p.m. ET/1845 GMT

By Caroline Valetkevitch

NEW YORK, May 13 (Reuters) –Global stock indexes were little changed on Monday while the U.S. dollar index eased as investors awaited this week’s U.S. inflation data that is expected to be key for the outlook for U.S interest rates.

While the U.S. consumer prices report will likely take center stage, U.S. producer price data is also due this week, along with final reports on European inflation that should reinforce expectations for a June rate cut from the European Central Bank.

Chinese retail sales and other data are expected as well.

This week brings comments from a host of Federal Reserve speakers, including Fed Chair Jerome Powell.

Investors have been focused on inflation as they weigh how soon the U.S. central bank is likely to cut rates. Markets are pricing in around an 80% chance of a rate cut by the Fed’s September meeting, with almost 44 basis points (bps) of reductions in total expected in 2024, LSEG data showed. FEDWATCH

Economists polled by Reuters expect the closely watched core CPI to rise by 0.3% in the month, down from 0.4% in March, for an annual gain of 3.6%, down from 3.8%.

Paul Nolte, senior wealth adviser and market strategist for Murphy & Sylvest in Elmhurst, Illinois, said both CPI and PPI reports will be important to investors, but added that “there’s been so much discussion about the consumer. Is the consumer tapped out? And can the consumer still afford to spend? CPI is going to encapsulate a lot of that.”

The first-quarter U.S. earnings season is winding down, but investors will see reports this week from some big U.S. retailers including Walmart WMT.N and Home Depot HD.N.

“Earnings from Walmart and Home Depot will be interesting to get a gauge on how the consumer is doing” as well, Nolte said.

The Dow Jones Industrial Average .DJI fell 71.25 points, or 0.18%, to 39,441.59, the S&P 500 .SPX lost 2.30 points, or 0.04%, to 5,220.38 and the Nasdaq Composite .IXIC gained 37.45 points, or 0.23%, to 16,378.31.

MSCI’s gauge of stocks across the globe .MIWD00000PUS rose 0.47 points, or 0.06%, to 782.53, and the STOXX 600 .STOXX index edged up 0.02%.

Chinese stocks eased. China’s finance ministry said on Monday it will start the long-awaited sales of 1 trillion yuan ($138.23 billion) of long-term treasury bonds that Beijing hopes will help stimulate key sectors of a flagging economy this week.

The dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, eased 0.1% to 105.21.

The relative outperformance of the U.S. economy continues to underpin the dollar, while only the threat of Japanese intervention is stopping it from re-testing the 160 yen barrier.

The Bank of Japan on Monday sent a hawkish signal to markets by cutting the amount of Japanese government bonds it offered to buy in a regular operation.

Against the Japanese yen JPY=EBS, the dollar was up 0.3% at 156.20, and the euro EUR=EBS was up 0.19% at $1.0789.

The yield on benchmark U.S. 10-year notes US10YT=RR fell 2.3 basis points to 4.481%, from 4.504% late on Friday.

U.S. crude CLc1 rose 86 cents to settle at $79.12 a barrel, and Brent LCOc1 gained 57 cents to $83.36. Spot gold XAU= fell 1% to $2,336.76 per ounce.

Additional reporting by Amanda Cooper in London and Wayne Cole in Sydney; Editing by Shri Navaratnam, Sam Holmes, Kevin Liffey, Will Dunham and Emelia Sithole-Matarise