Asian markets edged higher on Monday as investors prepared for a week filled with significant economic data, including the eagerly awaited U.S. inflation report set to be released on Friday.
The report is expected to influence the Federal Reserve’s decisions regarding interest rate cuts, although not necessarily for the next few months.
With U.S. and UK markets closed for holidays, trading volumes were subdued. Investors are particularly focused on the core Personal Consumption Expenditures (PCE) data, a preferred inflation gauge by the Fed.
April figures are anticipated to show a 0.3% increase, keeping the annual inflation rate at 2.8%, potentially yielding lower-than-expected results.
Analysts at TD Securities noted a slowdown in both consumer and producer price indexes in April compared to earlier in the year, predicting a 0.22% monthly increase in the core index compared to 0.32% in March.
In addition to U.S. data, inflation figures for the Eurozone are also due on Friday. While an increase to 2.5% is expected, it’s unlikely to deter the European Central Bank from implementing further policy easing the following week.
ECB policymakers Piero Cipollone and Fabio Panetta hinted at an impending rate cut, with market expectations suggesting a 3.75% cut on June 6 with an 88% probability.
The Bank of Canada may opt for a rate cut next week, while the U.S. Federal Reserve is expected to wait until September for its first adjustment.
This week will also feature speeches from at least eight Fed officials, including influential New York Fed President John Williams.
Additionally, the Bank of Japan Governor and Deputy Governor, along with the ECB’s Chief Economist, are scheduled to speak on Monday.
The BOJ is set to hold its policy meeting on June 14, with a possibility of raising interest rates to 0.15%, contrary to the global trend.
Despite some profit-taking last week, low borrowing costs globally have been positive for stocks and commodities.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.1%, recovering from a 1.5% decline last week. Japan’s Nikkei index also gained 0.3% as investors awaited Tokyo consumer price data later in the week.
In futures markets, S&P 500 futures were flat, while Nasdaq futures edged down 0.1%, following Nvidia’s (NASDAQ: NVDA) contribution to this year’s S&P 500 gains after exceeding expectations.
Currency markets remain closely watched amid ongoing concerns about Japan’s depreciation and intervention possibilities.
The dollar traded at 156.89 yen, nearing its recent high of 160.245 yen. Despite increases in bond yields, the yen continued its decline.
The euro remained steady at $1.0845 and failed to reach its recent high of $1.0895. Gold traded at $2,337 per ounce after a 3.4% drop from its all-time high of $2,449.89 last week.
Oil prices hovered near four-month lows, with Brent crude up 5 cents at $82.17 per barrel and U.S. crude up 9 cents at $77.81 per barrel.
As the driving season kicks off in the U.S. and investors await the outcome of the OPEC+ online meeting on June 2 to discuss potential new production cuts, analysts remain skeptical about a consensus on the matter.
Source: investing.com
