Futures pare drop with focus on rates; pound falls

Wall Street equity futures pared their declines while European stocks steadied as investors assessed how inflation data from the U.S. and the U.K. will affect the outlook for interest rates, and as they digested results from major companies.

Contracts for the S&P 500 and the Nasdaq 100 retreated by about 0.2 per cent, off their lows for the session. Airbnb Inc. rallied in premarket trading after the home-sharing company gave a revenue outlook that beat analysts’ estimates, prompting gains in other travel stocks. Devon Energy Corp. fell after the shale giant’s earnings fell short of projections and 2023 capital spending guidance came in higher than expected.

Europe’s Stoxx 600 reversed a modest drop, supported by gains in consumer stocks. Barclays Plc slumped as much as 11 per cent, the most since April 2020, after the bank’s earnings missed estimates.  

Investors are evaluating U.S. CPI data that showed prices rose more than forecast, and subsequent comments from Federal Reserve officials. U.K. inflation also remains stubbornly high, still in double digits and five times above the Bank of England’s target, according to data out Wednesday. Even so, the pound weakened as CPI fell more than expected in January. Traders trimmed their bets on further rate hikes and gilts rallied.