US inflation data could cause volatility in stocks.

US stock futures trod water ahead of the release of key US inflation data for August that could impact Fed policy.
Economists expect inflation to dip to 5.3% year-on-year from July’s 5.4% reading, which was a 13-year high.
Elsewhere, oil prices rose for the third day as another hurricane approached the southern US.

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US stock futures wavered Tuesday ahead of the release of key inflation data that could influence the Federal Reserve’s moves on monetary policy, while oil prices climbed for the third day running.

Dow Jones futures were up 0.14% at 5.30 a.m. ET after the linked index climbed 0.76% on Monday. S&P 500 futures also rose 0.14%, following the benchmark’s 0.23% gain in the previous day. Nasdaq 100 futures were roughly flat.

Investors were bracing themselves for the release of US consumer price index inflation data for August, due at 8.30 a.m. ET. Economists think year-on-year CPI inflation is set to come in at 5.3% after holding steady at a 13-year high of 5.4% in July.

The Federal Reserve has long said elevated rates of US inflation should prove transitory, arguing that the current levels are a result of the economy reopening at a rapid pace. A weak US jobs report for August cooled expectations for the Fed to cut back its $120 billion a month of bond purchases sooner than initially expected.

However, some investors still believe the Fed is not taking price rises seriously enough and could be forced to reduce its support for the US economy if inflation remains strong.

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Read more: Real estate will play a vital role for investors as inflation heats up, according to the world’s largest asset manager. Here are 8 things BlackRock says investors should focus on as they fill out their real-asset portfolios.

Deutsche Bank’s Jim Reid said he expects to see inflation slow in August due to demand continuing to soften in pandemic-affected sectors. “That said, US inflation has had a regular habit of surprising to the upside in recent months,” the research strategist said in a note.

Edward Moya, senior market analyst at Oanda, said: “Investors don’t want to have massive positions before the inflation data as the risks are to the upside as COVID inflation continues to hamper supply chains,” he said.

Oil futures rose for the third day on Tuesday as another hurricane approached the southern US, weeks after Ida led to a large drop in output. WTI crude, the US benchmark price, was up 0.62% to $70.89 a barrel. Brent crude was 0.69% higher at $74.02 a barrel.

“Oil prices are rising as supply-side constraints tighten,” Naeem Aslam, chief market analyst at AvaTrade, said. “Oil producers have yet to recover from Hurricane Ida’s devastation, and they are now bracing for another tropical storm, Nicholas.”

In Asia stock markets overnight, China’s CSI 300 fell 1.49%, its second down day in a row as Beijing’s crackdown on big tech continues to worry investors. …read more

Source:: Business Insider


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