Global Stock Markets Retreat from All-Time Highs Ahead of Inflation Assessments

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Global Stock Markets Pause Below Record Highs Ahead of Key Inflation Data



World shares remained subdued just shy of record levels on Monday as investors awaited crucial inflation figures from the United States and eurozone, which could influence future interest rate expectations. The upcoming data release serves as a significant test for investors, who have had to reassess their assumptions about central bank rate cuts following surprising developments in U.S. job growth and inflation trends.

In early London trade, MSCI's global equity index <.MIWO00000PUS> hovered flat, having reached a record peak last week propelled by new highs in U.S. stocks, particularly driven by substantial gains in AI giant Nvidia. Eurozone inflation data is due later in the week, with expectations that the core figure will moderate to around 2.9 percent, nearing the European Central Bank's (ECB) 2 percent inflation target. Traders have adjusted their expectations for ECB rate cuts, now looking towards June instead of April, as initially anticipated after the ECB's January meeting.

Analysts suggest that while higher-than-expected inflation figures may trigger initial hawkish reactions, the overall impact on the Federal Reserve's monetary policy outlook may be limited. However, a sub-3 percent core inflation reading for the eurozone could prompt significant market repricing towards a dovish stance.

Market participants are closely monitoring comments from central bank officials, including ECB President Christine Lagarde and the Bank of England's chief economist. Additionally, the Reserve Bank of New Zealand (RBNZ) is set to hold its first policy meeting of the year, with expectations of a possible rate hike due to persistent inflation concerns, despite the possibility of the country slipping into recession in the fourth quarter.

In currency markets, the U.S. dollar edged lower against a basket of currencies, while the yen showed marginal weakness against the dollar ahead of Japanese inflation data release. Japan's Nikkei share average (.N225) hit a fresh record high on Monday.

Commodity prices saw gold trading slightly lower at $2,032 an ounce, following a 1.4 percent rally last week. Oil prices also dipped, with both Brent and U.S. crude down 0.5 percent to $81.21 and $76.12 per barrel, respectively.





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