Asian Stocks Eye Early Gains as Rate Cut Bets Firm: Markets Wrap – Yahoo Finance

June 2, 2024

(Bloomberg) — Asian stocks rose on Monday as a weak reading of the Federal Reserve’s preferred inflation gauge spurred hopes of an interest rate cut.

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Australian, Japanese and Hong Kong shares rose, while Indian stock futures surged after exit polls showed a landslide victory for Prime Minister Narendra Modi’s party. Mainland Chinese shares fell.

Gains in Asian stocks have been buoyed by a weaker dollar in recent weeks, which fell 1.1% in May, its first monthly decline this year, as investors bet the Federal Reserve will finally begin easing monetary policy.

Core personal consumption expenditures, the Fed’s preferred inflation gauge, rose at its slowest rate this year on Friday, but political uncertainty could also bring instability, with tensions rising in the Middle East and over the U.S. presidential election.

“We’re starting to see some soft data coming out of the U.S.,” Naomi Fink, a strategist at Nikko Asset Management Co., said on Bloomberg Television. “If we see some mild de-inflation, that would be a pretty good outcome for global markets.”

For the latest election results, see Bloomberg’s Mexico election live blog.

Oil prices rose. Australian government bond yields fell slightly, as did the 10-year government bond yield.

“While this would not be enough to justify an imminent Fed rate cut, we believe recent data continues to support our baseline scenario of a soft landing,” Solita Marcelli, chief investment officer for the Americas at UBS Group AG’s asset management unit, wrote in a note. “This should allow the U.S. central bank to begin easing policy later this year, likely at its September meeting.”

Read more: A key driver of U.S. consumer spending is suddenly losing steam

Meanwhile, Saudi Aramco’s $12 billion share offering sold out shortly after trading began on Sunday, boon for the government as it tries to fund a major economic reform program.It wasn’t immediately clear how much of the demand was coming from abroad, but the backlog reflects a mix of domestic and international investors, people familiar with the matter told Bloomberg News.

In Mexico, polling stations were closed and two media outlets predicted a victory for Claudia Scheinbaum, who ran for the ruling Morena party on a platform of continuity.

This week, traders will be closely watching inflation in emerging markets including Indonesia, South Korea and Chile, as well as growth data from Australia and Europe. The European Central Bank will cut interest rates for the first time in a cycle on Thursday, potentially opening the door for a weaker euro. U.S. employment data is due on Friday.

Major events this week:

China Caixin Manufacturing PMI, Monday
Indonesia CPI, Monday
India S&P Global Manufacturing PMI, Monday
Eurozone S&P Global Manufacturing PMI, Monday
UK S&P Global/CIPS Manufacturing PMI, Monday
US Construction Spending, ISM Manufacturing, Monday
The International Atomic Energy Agency’s Board of Governors meets in Vienna on Monday
South Korea Consumer Price Index, Tuesday
German unemployment rate on Tuesday
South African GDP on Tuesday
Brazil’s GDP on Tuesday
US Factory Orders, JOLTS, Tuesday
Australian GDP Wednesday
South Korea GDP on Wednesday
China Caixin Services PMI, Wednesday
Eurozone S&P Global Services PMI, PPI, Wednesday
Canada interest rate decision Wednesday
Eurozone retail sales, ECB interest rate decision on Thursday
China trade, foreign exchange reserves on Friday
Eurozone GDP on Friday
Mexico Consumer Price Index, Friday
Chilean copper exports, trade, consumer price index on Friday
U.S. unemployment rate, nonfarm payrolls, wholesale inventories on Friday