Wayne Cole
SYDNEY (Reuters) – Asian shares rose on Monday as investors braced for a data-heavy week culminating in a key U.S. inflation report that could pave the way for a cut in interest rates there, although not for a few months.
Holidays in the US and UK contributed to weaker trading ahead of Friday’s data on core personal consumption expenditures (PCE), the Federal Reserve’s preferred measure of inflation. Average forecasts call for growth of 0.3% in April, keeping the annual pace at 2.8%, with downside risks.
“Consumer and producer price data suggest core PCE inflation lost momentum further in April after a strong start to the year. “, analysts at TD Securities said in a statement.
“We also expect the stock to rise 0.23% on the month, while Super Core shares are likely to decline to 0.26%.
Eurozone inflation data will also be released on Friday, and an expected rise to 2.5% should not prevent the European Central Bank from easing policy next week.
Politicians Piero Cipollone and Fabio Panetta signaled impending rate cuts over the weekend, while markets are pricing in an 88% chance of a rate cut to 3.75% on June 6.
The Bank of Canada could also ease its rate next week, while the Fed appears to be waiting until September to make its first move.
At least eight Fed officials are scheduled to speak this week, including two appearances by powerful New York Fed Chairman John Williams.
The governor and deputy governor of the Bank of Japan will speak later on Monday along with the ECB’s chief economist. The Bank of Japan will hold its policy meeting on June 14, and there is some chance it could buck the global trend and raise rates again, albeit by a modest 0.15%.
The prospect of lower borrowing costs across much of the world was positive for stocks and commodities, although many markets still faced profit-taking last week.
MSCI’s broadest index of Asia-Pacific shares outside Japan firmed 0.1%, having fallen 1.5% last week and retreated from a two-year peak.
rose 0.3% ahead of consumer price data in Tokyo later this week.
were unchanged, while Nasdaq futures fell 0.1%, having hit a record high last week after Nvidia (NASDAQ:) beat expectations.
Indeed, Nvidia alone accounts for a quarter of the market’s growth this year, while the “Magnificent Seven” of tech darlings are up 24% for the year.
In currency markets, attention was again focused on the yen and the risk of Japanese intervention ahead of the 160.00 level. The dollar was at 156.89 yen, up 0.9% last week and nearing a recent high of 160.245.
Japan renewed efforts to counter the yen’s excessive fall during a weekend meeting of Group of Seven (G7) financial leaders after a recent rise in bond yields to a 12-year high failed to slow the currency’s decline.
The euro remained steady at $1.0845 and missed its recent high of $1.0895.
Gold held at $2,337 an ounce, having retreated 3.4% last week and down from an all-time peak of $2,449.89. [GOL/]
Oil prices are stuck near four-month lows amid concerns about demand as the U.S. driving season begins this week. Investors are waiting to see whether OPEC+ will discuss new production cuts at an online meeting on June 2, although analysts doubt there will be consensus on the move. [O/R]
rose 5 cents to $82.17 per barrel and 9 cents to $77.81 per barrel.