Ankur Banerjee
SINGAPORE (Reuters) – Asian stocks rose on Wednesday while the dollar slipped as traders weighed mixed U.S. producer price data and braced for a key consumer prices report later in the day that is likely to weigh on the near-term Federal Reserve policy.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.38%, having hit a new 15-month high earlier in the session. added 0.58%.
Data overnight showed U.S. producer prices rose more than expected in April, indicating inflation remained stubbornly high at the start of the second quarter.
Fed Chairman Jerome Powell, speaking at a banking event in Amsterdam, called the PPI data “mixed” rather than “hot” because previous data was revised downward.
Investors have been forced to abandon their expectations of US rate cuts this year due to persistent inflation and are now pricing in 43 basis points of easing this year, compared with 150 basis points of easing expected in early 2024.
“Expectations for rate cuts in the market have been rising recently based on weaker-than-expected U.S. labor market data, but unless prices follow suit, hopes for rate cuts will be dashed,” said Ryan Brandham, head of global capital markets. , North America, Validus Risk Management.
All eyes are now on Wednesday’s US consumer price report, which is expected to show the consumer price index rose 0.3% month-on-month in April, up from a 0.4% rise in the previous month. according to a Reuters poll.
Powell repeated his warning about rate cut expectations, although the Fed chief along with Cleveland Fed President Loretta Mester poured cold water on any thoughts of rate hikes, ING economists said.
remove advertising
.
“That doesn’t necessarily sound like someone who would expect big CPI numbers today.”
The Nasdaq index hit a record closing high on Tuesday and the Dow Jones Industrial Average also rose, helped by comments from Powell that reassured investors that the central bank’s next interest rate hike was unlikely to be an increase. [.N]
Retail investor favorites GameStop (NYSE:) and AMC surged overnight as messages from “Growling Kitten” Keith Gill sparked talk of the return of the central figure behind 2021’s crazy meme stock.
In China, shares were lower in early trading, with the blue-chip index down 0.16% and Hong Kong down 0.22%.
US President Joe Biden has unveiled a package of sharp tariff hikes on a range of Chinese imports, including electric vehicles, computer chips and medical products.
In the foreign exchange market, the dollar fell as traders remained hesitant to make any moves ahead of the CPI report, while the euro was close to its one-month peak and was last seen at $1.0817.
The index, which measures the U.S. currency against six peers, was last at 105.01. The yen last traded at 156.36 per dollar, having touched a two-week low of 156.80 on Tuesday, with traders wary of another bout of intervention from Japanese authorities.
On April 29, the yen hit a 34-year low of 160.245 per dollar, triggering rounds of aggressive yen buying that traders and analysts suspect was the work of the Bank of Japan and Japan’s Finance Ministry.
Commodity prices rose as major wildfires threatened Canada’s oil sands and the market expected lower crude and gasoline inventories later in the day. [O/R]
remove advertising
.
U.S. crude rose 0.4% to $82.71 a barrel and settled at $78.39 a barrel, up 0.5%.
XAU= remained virtually unchanged at $2,356.79 per ounce.