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Asian Stocks Rise as Dollar Slips

(Bloomberg) — Asian stocks inched higher on Tuesday as the dollar slipped ahead of a swath of inflation prints that are expected to influence the direction of global monetary policy.

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The MSCI AC Asia Pacific index rose, with stocks in Hong Kong leading gains in Asia. Markets in Japan and Australia were slightly down. US and UK markets were closed on Monday and European shares edged higher in thin trading. S&P 500 futures rose.

Chinese property shares advanced after the financial hub of Shanghai lowered down-payment ratios and the minimum mortgage threshold, as bigger Chinese cities follow through on the central government’s aid for the property sector. Tech stocks in China gained as major Chinese state banks said they will invest a combined 114 billion yuan ($15.7 billion) into a semiconductor investment fund.

The dollar retreated for a third day and was down against all Group-of-10 peers, while the 10-year Treasury yield remained stable.

Traders will this week be studying fresh inflation data from Australia to Japan, the euro region, and the US. Bank of Japan Governor Kazuo Ueda and his deputy indicated there is scope for gradually raising interest rates now that the nation has shifted away from an inflation norm of 0%. Japan’s April producer prices beat estimates, jumping 2.8% from a year earlier.

“Things will pick up tonight when the US opens, and then I suspect the next few days, all else being equal, will be driven by end-of-month flows and then that crucial PCE Index release,” said Kyle Rodda, a senior market analyst at Capital.Com Inc. “All we are seeing is the usual tidal currents in the market when there’s nothing much going on and no one is really around.”

The Federal Reserve’s favorite measure of underlying inflation is expected to show modest relief when it lands on Friday. Chair Jerome Powell has stressed the need for more evidence that inflation is on a path to the 2% goal before easing policy. John Williams, Lisa Cook, Neel Kashkari, and Lorie Logan are among US central bankers due to speak this week.

In commodities, gold steadied as traders awaited US inflation data. Oil advanced as focus shifted to an OPEC+ supply meeting on Sunday and US demand at the start of the summer driving season. Copper resumed its rally as China steps up efforts to rescue its property market and as the dollar weakened. Wheat briefly touched the highest level in more than nine months on concerns over shrinking stockpiles.

Story continues

European Market Focus with US and UK Closures

With US and UK markets closed Monday, European stocks took the spotlight, with carmakers and utilities leading a modest advance in the Stoxx Europe 600 index. Turnover was less than half the 20-day average for the time of day.

The ECB shouldn’t rule out lowering borrowing costs at both its June and July meetings, Governing Council member Francois Villeroy de Galhau said, pushing back against fellow monetary officials uncomfortable with the idea of consecutive cuts. Chief Economist Philip Lane told the Financial Times the central bank will have to keep policy restrictive through 2024, even with the prospect of an interest-rate cut next month.

While an ECB rate cut in June has been widely telegraphed, subsequent steps are less clear given uncertainty over wage growth and factors like the fighting in the Middle East. Data this week may show headline inflation in the euro region ticked up in May.

Upcoming Events Impacting the Market

Some key events this week:

• IMF holds discussions with Ukrainian authorities to review economic policies as the country seeks to unlock next tranche of $2.2 billion in aid, Monday

• Cleveland Fed President Loretta Mester speaks at BOJ event in Tokyo; Minneapolis Fed President Neel Kashkari and ECB Governing Council member Klaas Knot address Barclays-CEPR International Monetary Policy forum, Tuesday

• South African election, the most significant since the end of apartheid, Wednesday

• Fed releases Beige Book economic survey, Wednesday

• South Africa rate decision, US initial jobless claims, GDP, wholesale inventories, Thursday

• New York Fed President John Williams speaks at the Economic Club of New York, Thursday

• GDP data published for Canada, Eurozone, Turkey, Friday

• Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday

Some of the main moves in markets:

Market Movements

Stocks

• S&P 500 futures rose 0.1% as of 11:40 a.m. Tokyo time

• Nasdaq 100 futures rose 0.2%

• Japan’s Topix fell 0.1%

• Australia’s S&P/ASX 200 fell 0.2%

• Hong Kong’s Hang Seng rose 0.6%

• The Shanghai Composite was little changed

• Euro Stoxx 50 futures rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%

• The euro rose 0.2% to $1.0876

• The Japanese yen was little changed at 156.74 per dollar

• The offshore yuan was little changed at 7.2593 per dollar

Cryptocurrencies

• Bitcoin fell 1.4% to $68,618.91

• Ether fell 0.7% to $3,862.5

Bonds

• The yield on 10-year Treasuries was little changed at 4.46%

• Japan’s 10-year yield advanced one basis point to 1.035%

• Australia’s 10-year yield declined two basis points to 4.26%

Commodities

This story was produced with the assistance of Bloomberg Automation.

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