Stock markets

Traders are closely following the utterances of US central bank officials on their outlook for rates, with most warning that while inflation was on a downward trajectory, they wanted to see more evidence before committing to a cut.

In Europe, London fell at the open even after data showed UK inflation had eased to the Bank of England's two percent target.

Traders are also keeping an eye on developments in France, with fears growing that a snap legislative election called by President Emmanuel Macron could see right-wing parties succeed and cause political turmoil in the European Union.

The weaker-than-expected May consumer price index marked a second successive month of slowing -- to a more than three-year low -- and boosted optimism that the central bank would be able to soften monetary policy after a long-running campaign of tightening.

Forecasts for the number of reductions the Fed will make in 2024 have been whittled down from six at the start of the year to just three at best now, following a string of figures indicating the labour market remains solid and the economy still in rude health.

The zero growth in April followed an expansion of 0.4% in March, according to the Office for National Statistics.

After an upbeat run last week driven by signs of an easing in the labour market and economy, Friday's forecast-busting non-farm jobs report provided a dose of reality that interest rates might be kept elevated for some time.

Figures on Tuesday showed job openings had fallen more than expected, while Wednesday's ADP private-sector gauge also came in below forecasts.

Figures from payroll firm ADP on Wednesday showed private-sector hiring slowed far more than estimated in May.

Job vacancies fell far more than expected in April, to below 8.1 million, which Briefing.com said was the lowest level since 2021.

The losses came as energy firms were weighed by a further drop in oil that came after OPEC and other major producers said they would begin lifting output before the year's end, calling time on a period of cuts that has kept crude elevated.

With crucial inflation data out of the United States due at the end of the week, investors are largely playing a waiting game, with many inclined to sell after a recent run-up.

Figures last Friday showing US consumer confidence picking up and inflation expectations coming down provided traders enough confidence to propel hopes for at least one interest rate cut before January.

The S&P 500 and Nasdaq both benefited Friday from figures showing one-year expectations for prices edged down slightly while consumer sentiment picked up.

A weeks-long rally in equities has petered out in the past few days on profit-taking and as central bank officials pushed back against bets on an early reduction.

The news, however, was offset slightly by forecast-busting earnings from US tech titan Nvidia that showed profits and revenue soaring.

A slowdown in US inflation and China's announcement last week of plans to support its crucial but battered property sector have helped propel equities but, with that euphoria petering out, traders are taking a breather.

The announcement out of Beijing on Friday provided a much-needed boost to the country's ailing developers, many of whom are drowning in a sea of debt.

All three main indexes in New York as well as London, Paris and Frankfurt turned lower Thursday, having ended at record highs the day before.

There was also some nervousness on trading floors after Beijing hit out at Washington's decision to impose steep tariff hikes on Chinese imports such as electric vehicles and semiconductors.

The gains come as traders turn their attention to the release of key US jobs data due later in the day, which could play a major role in the Federal Reserve's decision-making on when to lower borrowing costs.

It touched 160.17 in morning trade -- its weakest since 1990 -- fanning speculation that Japanese authorities would step in to support their currency for the first time since 2022.

Investors were awaiting the release later in the day of the Federal Reserve's preferred gauge of inflation, personal consumption expenditures (PCE) index, hoping for an idea about its plans for interest rates ahead of next week's policy meeting.

With Iran downplaying a reported Israeli attack on the country, which came days after a drone and missile strike on Israel by Tehran, tensions between the regional foes appeared to have cooled.

Traders have been on edge since Saturday's barrage by Iran, which Israel's army chief General Herzi Halevi warned would be met with a response.

Oil edged up after the previous day's losses, which were fuelled by data indicating softer demand in the United States and fading fears of a regional war in the Middle East.

The foreign exchange market has witnessed a surge in volatility following Iran's weekend drone and missile assault on Israel, in retaliation for what Tehran said was an Israeli strike on its embassy in Syria.

Traders were also digesting figures showing Chinese expansion easily beat expectations in the first three months of the year but retail and industrial data came in well below par, suggesting leaders have much work to do to kickstart growth.

The consumer price index "is the critical number this week", said NatAlliance Securities' Andrew Brenner.

With consumer prices picking up in January and February, the jobs market still strong and the economy in rude health, traders have regularly tweaked their forecasts for monetary policy easing this year, and some are even contemplating no cuts before 2025.