European stocks are set to open with little to no change on Wednesday after the second month of unexpectedly high inflation closed off the opportunity for an immediate rate reduction by the U.S. Federal Reserve.
Market watchers are waiting for figures on U.S. producer price inflation and retail sales coming this week to understand the Federal Reserve's potential actions regarding interest rate cuts. In addition, traders are looking forward to the Federal Open Market Committee (FOMC) meeting on March 19 and 20 to search for indications of when rate cuts may occur.
In Asia, the markets saw varied activity as China's property developer Country Garden Holdings didn't meet its bond payment and Toyota Motor Corp. agreed to its labor union's wage increase demands in full. This adds to the pressure on the Bank of Japan to increase interest rates as soon as the next week.
The dollar maintained some gains from the previous night and remained stable, having experienced its biggest drop in a month in the last session, as Treasury yields rose to one-week highs.
Oil prices increased slightly in Asian trading due to anticipations of robust demand in the U.S. American stocks bounced back overnight as inflation data mostly aligned with predictions. February's Consumer Price Index (CPI) rose 0.4 percent monthly and 3.2 percent yearly. Core inflation was at 0.4 percent, compared to the forecasted 0.3 percent increase.
The tech-centered Nasdaq Composite experienced a 1.5 percent surge after two consecutive days of losses. The S&P 500 increased by 1.1 percent, setting a new record high closing, and the Dow Jones boosted by 0.6 percent.
European stocks ended Tuesday positively as weak inflation figures from Germany, U.K. unemployment, and wage growth data raised expectations of rate cuts by the European Central Bank and the Bank of England. The pan-European STOXX 600 rose by 1 percent. The German DAX increased 1.2 percent, France's CAC 40 gained 0.8 percent, and the U.K.'s FTSE 100 surged 1 percent.
