Futures edge higher ahead of inflation data

US stock index futures are on the rise as investors anticipate US inflation data and minutes from the Federal Reserve’s policy meeting for indications of whether US interest rates have hit their peak. Following last month’s banking turmoil, some investors believe that the Fed will soon conclude its aggressive monetary tightening campaign and start to cut rates in the second half of the year, amid increasing concerns of a recession.

The Labor Department will release the data at 8:30 a.m. ET (12:30 GMT) and it is predicted to indicate that headline and core consumer prices slipped to 0.2% and 0.4%, respectively, on a monthly basis in March. 

Despite estimates targeting a substantial decrease in headline numbers year-on-year, to 5.2% from 6.0%, the core measure, which does not include volatile food and energy prices, is expected to rise to 5.6% from 5.5%. If the Fed is seen to be proceeding with another rate hike at the May 3 meeting, after publishing the CPI report, the equity market and other assets may become volatile.

Currently, money market traders have received indications that there is almost a 75% chance that the Fed will raise interest rates by 25 basis points at the end of the May meeting, according to CME Group’s Fedwatch tool. Following this, investors will closely observe the minutes from the US central bank’s policy meeting in March throughout the day to assess investment rates’ trajectory. The Fed previously raised interest rates by 25 bps in March and informed investors that it was about to pause further rate hikes.

Moreover, investors eagerly await the first-quarter earnings season, which begins on Friday with the release of the results from Citigroup, JPMorgan Chase and Wells Fargo.

In premarket trading, Dow e-minis surged by 64 points, or 0.19%, S&P 500 e-minis rose by 5.25 points, or 0.13%, and Nasdaq 100 e-minis increased by 8 points, or 0.06%. However, shares of National CineMedia Inc. plunged 19.9% after the major North American movie-theater advertising business announced it had filed for bankruptcy protection and signed a restructuring agreement with its creditors. Additionally, US-listed shares of the Chinese firms Alibaba Group Holding Ltd., Baidu Inc. and JD.com Inc. fell by almost 2% as investors reviewed increasing geopolitical tensions. China plans to close the airspace north of Taiwan for about half an hour next week, as a falling object from a satellite launch vehicle could pose a risk.

Reported by Sruthi Shankar in Bengaluru, this article was edited by Shounak Dasgupta.

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