Wall Street points higher ahead of inflation data, earnings

NEW YORK (AP) – Wall Street showed higher before the bell on Wednesday, ahead of more inflation and retail sales data as well as the start of corporate earnings season.

Futures on the Dow Jones Industrial rose 0.6% and futures on the S&P 500 rose 0.8%.

Fears of a recession have weighed on markets as stubbornly hot inflation prompts consumers to rein in spending.

The Federal Reserve is aggressively raising interest rates to make borrowing more expensive, a strategy that risks slowing the US economy too much and pushing it into recession.

The Fed is due to release minutes from its last meeting later on Wednesday, potentially giving Wall Street more insight into its views on inflation and next steps.

Investors and economists still expect the Fed to hike its federal funds rate by three-quarters of a percentage point next month, the fourth such hike. That’s three times the typical increase and would put the rate in a range of 3.75% to 4%. The year started practically from scratch.

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The government is also due to release its wholesale prices report on Wednesday and provide an update on how inflation is hitting businesses. A closely watched consumer prices report is due Thursday and September retail sales data is due Friday.

Corporate earnings season starts in earnest this week with earnings reports from PepsiCo, Delta Air Lines and Domino’s Pizza. Banks, including Citigroup and JPMorgan Chase, will also report results.

On Wednesday, PepsiCo raised its outlook for the year, with higher prices pushing third-quarter sales up 9%. Average prices at the beverage and snack maker increased by 17%.

The British pound weakened against the US dollar after Bank of England Governor Andrew Bailey confirmed the bank will not extend an emergency purchase plan launched last month to stabilize financial markets beyond Friday.

The pound fell almost 1% to just under $1.10 after Bailey spoke before recovering slightly. Financial markets tumbled and the currency hit a record low of $1.03 last month after the government announced plans for tax cuts without saying how it would pay for them.

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France’s CAC 40 rose 0.1%, while Germany’s DAX rose 0.2% and Britain’s FTSE 100 fell 0.1%.

South Korea’s kospi rose 0.5% to 2,202.47 after the Bank of Korea hiked interest rates by 0.5 percentage points on the back of US Federal Reserve rate hikes that hurt the dollar’s value against many other currencies, including the Won.

Rhee Chang-yong, Governor of the Bank of Korea, told reporters that most monetary policy board members want the policy rate to be 3.50%. Analysts at SG Global Economics said they expect the pace of tightening to slow, with two more hikes of 0.25 percentage points, one in November and another in January next year.

The Japanese yen fell to a 24-year low at 146 yen levels against the US dollar, raising expectations of intervention to support the yen after such a move in September. The dollar was trading at 146.59 Japanese yen versus 145.80 yen. The euro cost 97.10 cents and rose from 97.07 yen.

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The weaker yen raises costs for both consumers and businesses that depend on imports for food, fuel and other necessities, but greater purchasing power for foreign currencies should boost tourism. Japan reopened fully to individual tourist travel this week after being closed for more than two years due to the pandemic.

Japan’s benchmark Nikkei 225 was little changed, shedding 4 points to end at 26,396.83. Australia’s S&P/ASX 200 rose 2.5 points to 6,647.50. Hong Kong’s Hang Seng slipped 0.8% to 16,700.31, while the Shanghai Composite climbed 1.5% to 3,025.51.

In energy trading, the reference price for US crude oil rose 38 cents to $89.73 a barrel in electronic trading on the New York Mercantile Exchange. US crude prices fell 2% on Tuesday. Brent crude, the international price standard, rose 63 cents to $94.92 a barrel.

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