© Reuters. FILE PHOTO: Monitors showing stock index prices and the exchange rate of the Japanese yen against the US dollar are seen after the New Year ceremony marking the opening of trading in 2022 at the Tokyo Stock Exchange ( TSE), in the midst of the coronavirus disease (COVI
(Reuters) – Global stocks rose while the dollar fell in volatile trading on Tuesday after data showed U.S. inflation rose at its slowest pace since late 2021 in January, reinforcing investor expectations that the Federal Reserve is nearing the end of its rate hike cycle. .
The consumer price index increased 6.4% in the 12 months to January, more than the 6.2% expected, but marking its smallest annual increase since the end of 2021.
On a month-over-month basis, consumer prices rose 0.5% in January, after rising 0.1% in December, the Labor Department said on Tuesday.
MSCI’s all-country index jumped as much as 0.45% to session highs, before pulling back to show a 0.2% gain on the day. Europe’s index hit a new one-year high, rising as much as 0.9%.
The softer annual reading strengthened expectations for a hike of just 25 basis points from the Fed next month. Investors now attribute a 93.5% chance of a quarter-point rise in March, up from 87% before the data.
“The data doesn’t really change expectations for a 25 basis point gain at the next meeting,” said Robert Pavlik, senior portfolio manager at Dakota Wealth, Fairfield. “I hope there will be a pause somewhat soon.”
Yields on the 10-year US Treasury fell 2.7bps on the day to 3.6844%, having fallen as much as 9bps immediately after the data. The latter was down 0.3%, having fallen as much as 0.7%.
US stock futures soared, rising as much as 1% before giving up those gains and last trading unchanged, as were the market.
Gold, which tends to benefit from a weaker dollar, rose 0.7% to $1,865.49 an ounce, near session highs.