(Bloomberg) — US equity futures rose as investors’ focus turned from the presidential debate to upcoming price data that may solidify the case for lower interest rates.

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Contracts on the S&P 500 and Nasdaq 100 advanced, suggesting this week’s rally on Wall Street is set to continue. Both indexes are on course for a third quarter of gains amid expectations that signs of faltering economic growth will give the Federal Reserve more room to ease policy this year.

A gauge of the dollar was steady near an eight-month high, on track for a sixth weekly gain. The greenback initially rose as markets assessed former president Donald Trump was the victor in the debate with President Joe Biden, whose performance intensified worries about his ability to win the November election.

“Markets likely extrapolated today’s debate outcome to the actual election outcome in November,” said Carol Kong, a strategist at Commonwealth Bank of Australia in Sydney. “Trump’s policies are likely to add to inflationary pressures and escalate trade tensions, thereby supporting US interest rates and the safe-haven US dollar.”

Treasuries retreated, paring gains from the prior session, when lackluster US economic data reinforced speculation the Fed will cut interest rates this year to prevent a bigger slowdown in the economy.

Economists expect the Federal Reserve’s preferred inflation gauge, the core PCE Price Index, slowed to an annualized rate 2.6% last month from 2.8%. That would be the lowest reading since March 2021, though it remains above the Fed’s goal for 2% inflation. Several data points Thursday suggested a downshift in growth tied to the central bank’s higher-for-longer stance.

US PREVIEW: May PCE Inflation to Offer Welcome News for Fed

Fed Bank of Atlanta President Raphael Bostic said he continues to expect one rate reduction this year amid signs inflation has resumed its decline. Earlier this month, Fed officials penciled in just one rate reduction for 2024. Swap markets are pricing in about 45 basis points of easing in 2024, which would equate to less than two cuts.

“The fundamental question behind the PCE print is whether there will be at least one rate cut this year,” said Mabrouk Chetouane, head of global market strategy at Natixis Global Asset Management. “If it goes in a way the consensus and the Fed aren’t anticipating, then it will be problematic for equity and bond markets alike.”

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Among individual movers in US premarket trading, Nike Inc. shares sank 14% after the sneaker company’s full-year outlook missed expectations.

French Stocks Sink

European stocks pared an early gain, weighed down by a decline in France’s equity benchmark ahead of the weekend’s parliamentary election, which has upended markets across the region. Investors pulled the most money out of European equity funds in almost four months in the week through Wednesday, according to a Bank of America Corp. note citing EPFR Global data.

France’s CAC 40 index dropped 0.5%. Traders are going into France’s election holding the most futures contracts on French bonds in at least a year, while hedging stock losses with the most put options tied to Europe’s main blue-chip benchmark in two years. The main concern for investors is that the new French government will drive the country deeper into debt.

“We retain a cautious stance on French financial assets due to the high event risks and the slim chances of meaningful fiscal consolidation, regardless of the election result,” Bank J Safra Sarasin strategists led by Karsten Junius said in a note.

Among individual movers in Europe, L’Oreal SA fell after the French beauty-products maker said it expects slower growth in the overall beauty market this year. Puma SE and JD Sports Fashion Plc declined, tracking a slump in Nike Inc. shares after the sneaker company’s full-year outlook missed expectations.

Nokia Oyj shares rose as much as 4.4% after the Finnish mobile-phone company agreed to buy US-listed optical transmission equipment maker Infinera.

A gauge of Asian equities climbed as much as 0.6% with Japanese, South Korean and Chinese shares among the top gainers. Japan’s stock benchmark Topix index was on course for its highest close in 34 years.

Meanwhile, India is set to lure billions of dollars more inflows when JPMorgan Chase & Co. adds the nation’s government bonds to its emerging markets index on Friday, opening up a $1.3 trillion market to a broader range of investors.

In commodities, oil held in the narrowest trading range since 2021, ahead of US economic data that may help set the tone for broader markets. Zinc climbed to the highest level in more than three weeks on speculation over Chinese production cuts, joining a broad advance for base metals. Gold headed for a third consecutive quarterly gain, the best run since a pandemic-blighted 2020.

Key events this week:

• US PCE inflation, spending and income, University of Michigan consumer sentiment, Friday

• Fed’s Thomas Barkin speaks, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.4% as of 5:44 a.m. New York time

• Nasdaq 100 futures rose 0.4%

• Futures on the Dow Jones Industrial Average rose 0.1%

• The Stoxx Europe 600 rose 0.3%

• The MSCI World Index was little changed

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%

• The euro was little changed at $1.0705

• The British pound was little changed at $1.2647

• The Japanese yen was little changed at 160.68 per dollar

Cryptocurrencies

• Bitcoin fell 0.1% to $61,351.59

• Ether fell 0.2% to $3,433.75

Bonds

• The yield on 10-year Treasuries advanced two basis points to 4.30%

• Germany’s 10-year yield advanced one basis point to 2.46%

• Britain’s 10-year yield advanced three basis points to 4.16%

Commodities

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Michael Msika, Alice Gledhill, Chiranjivi Chakraborty and Julien Ponthus.

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