European stocks and US futures rose on Tuesday ahead of America’s midterm elections and the release of crucial inflation data later this week.
The regional Stoxx Europe 600 added 0.2 per cent by lunchtime, erasing earlier losses. London’s FTSE recovered to trade down 0.1 per cent.
Contracts tracking Wall Street’s benchmark S&P 500 rose 0.3 per cent and the tech-heavy Nasdaq 100 was up 0.6 per cent, pointing to a positive opening on Wall Street.
The moves come as US voters head to the polls, with the Republican party forecast to gain control of one or both of the two chambers of Congress.
The worst outcome for markets would be if a “few tightly fought races and legal challenges dragged on”, delaying results, said Joshua Shapiro, chief US economist at MFR consultancy.
But investors were also looking ahead to the publication on Thursday of October’s consumer price index, which may offer indications of the impact of successive interest rate rises from the Federal Reserve.
Higher readings would increase pressure on the Fed to raise borrowing costs by 0.75 percentage points for the fifth consecutive month when it next meets in December. Officials at the central bank on Friday suggested interest rates could soon rise by a smaller 0.5 percentage points, however, even as the Fed targets a higher terminal rate in its fight against inflation.
The data are expected to show headline inflation increasing at an annual rate of 8 per cent, down from 8.2 per cent in September. Excluding more volatile food and energy prices, core inflation is expected to have risen 6.6 per cent year on year, the same rate as the month before.
In government bond markets, the yield on the two-year US Treasury, which is particularly sensitive to interest rates, fell 0.01 percentage points to 4.71 per cent, while the yield on the 10-year also fell 0.01 percentage points to 4.2 per cent. Prices fall when yields rise.
The dollar index, which measures the US currency against a basket of six peers, added 0.2 per cent.
In Asia, equities in Hong Kong and China were down, with the Hang Seng index falling 0.2 per cent and the CSI 300 losing 0.7 per cent.