European stocks eked out small gains and Bund yields rose on Wednesday as investors waited for economic data from the eurozone, which is expected to provide more signals on the outlook for inflation.
The region-wide Stoxx Europe 600 index advanced 0.1 per cent, extending gains into the third consecutive trading session, while France’s Cac 40 rose 0.2 per cent and Germany’s Dax was flat.
Investors grew cautious as inflation came out higher than expected in Germany’s most populous region, North Rhine-Westphalia, rising 5.9 per cent in the year to August up from 5.8 per cent in July.
The reading raised doubts over whether the headline national figure for Germany would be higher than the 6 per cent forecast when it is published later on Wednesday. The caution pushed the interest rate-sensitive two-year German government bond yield 0.06 percentage points higher to 3.09 per cent.
Madrid’s Ibex 35 index rose 0.1 per cent, after preliminary inflation data showed the rate of Spain’s annual price growth accelerated to 2.4 per cent in August, up from 2.1 per cent in the previous month.
Meanwhile, futures contracts tracking Wall Street’s benchmark S&P 500 those tracking the tech-focused Nasdaq 100 both lost 0.1 per cent ahead of the New York opening bell.
Wall Street stocks rallied overnight, as investors took heart from the latest US labour market data for July, which showed the number of new job openings falling to their lowest level in over two years.
Since new job listings are seen as a proxy for labour demand, traders interpreted the report as a sign that high interest rates have fed through to the US economy, increasing chances that the central bank could soon pause its tightening campaign.
“This decline in job openings has occurred even as unemployment has remained at historically low levels,” noted Jim Reid, head of global fundamental credit strategy at Deutsche Bank.
“In other words, the fall in job openings doesn’t appear to have been at the expense of jobs, which is exactly what the Fed are wanting to see,” he said.
In government debt markets, yields on two-year US Treasuries added 0.04 percentage points to 4.93 per cent, while yields on the benchmark 10-year notes rose 0.03 percentage points to 4.15 per cent. Bond yields rise as prices fall.
Fresh inflation data from Australia showed that the annual pace of consumer price increases slowed to 4.9 per cent in July, down from 5.4 per cent in the previous month, landing below the 5.2 per cent market forecast.
The markets are now pricing in a 99.7 per cent probability that the Reserve Bank of Australia would keep rates steady for the third consecutive month in September.
The S&P/ASX 200 index ended the day 1.2 per cent higher. China’s benchmark CSI 300 index and Hong Kong’s Hang Seng index were both flat.