*Oil fell from several-year high on Monday
* Dollar falls from one-year high on Tuesday
* US, German bond yields hit higher
LONDON, Oct 13 (Businesshala) – U.S. stock futures rose and European stocks reversed early losses on upbeat earnings on Wednesday, though markets were nervous ahead of U.S. consumer price data in the later session and oil’s recent multi-day rally. Years dropped from high.
Concerns about rising inflation are munching on optimism about a global recovery from the COVID-19 pandemic.
The September US CPI is projected to show a monthly gain of 0.3%, according to a Businesshala poll. Minutes of the US Federal Reserve’s September policy meeting are also due later.
“The markets are at a crossroads,” said Giles Coglan, chief currency analyst at HYCM. “Are we in a stable environment – will we see low growth but high inflation? That’s the concern.”
S&P futures rose 0.17% after the S&P 500 fell 0.24% overnight, as JPMorgan reported third-quarter earnings growth that beat estimates at the company’s unofficial start of the earnings season.
European shares gained 0.5% from early losses, helped by an upbeat earnings forecast from German software group SAP and strong quarterly sales for French luxury goods maker LVMH.
UK shares changed little.
The MSCI World Equity Index was flat after falling in the last three sessions.
Oil prices fell on concerns of inflation, although increasing prices for power generation fuels such as coal and natural gas limited losses.
Brent crude fell 0.56% to $82.95 a barrel from Monday’s three-year high of $84.60, while US crude fell 0.52% to $80.22, from Monday’s seven-year high of $82.18.
Analysts at Goldman Sachs said in a note that energy supply constraints “could exacerbate peak inflation and further curtail growth if winter is cold”.
The dollar fell 0.25% against an index of currencies after hitting a one-year high in the previous session, with the Fed raising interest rates next month to announce a tapering of stimulus.
Three US Federal Reserve policymakers said on Tuesday that the US economy has recovered enough for the central bank to withdraw its support during the crisis.
The dollar stabilized at 113.55 yen against the Japanese currency on Tuesday after hitting a nearly three-year high. The euro was up 0.29% at $1.1561, recovering from the previous day’s 15-month low.
Yields on two-year US Treasury notes held steady at 0.35% after hitting an 18-month high on Tuesday.
Germany’s 10-year yield fell 2.5 basis points to -0.125%, from -0.085% earlier, the highest since the end of May.
“There is pressure from the inflation story,” said Charles Diebel, head of fixed income at asset manager Mediolanum, pointing to rising expectations of a UK rate hike.
“People are worrying about the same thing happening elsewhere, fearing inflation will remain so stable that central banks will be forced to respond.”
MSCI’s broadest index of Asia-Pacific shares outside Japan regained some ground, rising 0.36% after falling more than 1% a day earlier, its worst daily performance in three weeks.
Positive trade data from China, which showed export growth unexpectedly picking up in September, provided some relief to those worried about a slowdown in the world’s second-largest economy.
Despite continued weakness in real estate stocks, the data helped Chinese blue chips jump 1.15%.
Japan’s Nikkei fell 0.32%, as higher energy prices and a weaker yen meant trouble for a country that buys the bulk of its oil from overseas.
Gold, used as a hedge against inflation, rose 0.66% to $1,772 an ounce.