Asian Stocks Tread Water Before Inflation Data: Markets Wrap

(Bloomberg) — Asian stocks traded in a narrow range on Tuesday ahead of a swath of global inflation prints that’s expected to influence monetary policy.

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Equities in Japan, Australia and South Korea traded mixed after a start to the week when US and UK markets were closed and European shares edged higher in thin trading. US futures edged higher in early Asia hours.

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.

A gauge of the dollar and the 10-year Treasury yield slipped.

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.

Chinese property shares may move 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.

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.

Read More: About the ‘T+1’ Rule Making US Stocks Settle in a Day: QuickTake

The “T+1” rule that has the potential to cause trouble for overseas investors will come into effect when traders return from the long weekend — making US equities settle in one day rather than two.

Meanwhile, gold gained, while copper futures fell. Oil advanced for a second day on Tuesday, following its biggest weekly loss in four, with the focus on an OPEC+ supply meeting on Sunday and US demand at the start of the summer driving season.

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:

Stocks

  • S&P 500 futures were little changed as of 9:03 a.m. Tokyo time

  • Japan’s Topix rose 0.1%

  • Australia’s S&P/ASX 200 was little changed

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.0863

  • The Japanese yen was little changed at 156.85 per dollar

  • The offshore yuan was little changed at 7.2583 per dollar

Cryptocurrencies

  • Bitcoin fell 0.3% to $69,369.01

  • Ether was little changed at $3,887.86

Bonds

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

  • Japan’s 10-year yield advanced two basis points to 1.025%

  • Australia’s 10-year yield declined one basis point to 4.27%

Commodities

This story was produced with the assistance of Bloomberg Automation.

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