Asian Stocks Tread Water Before Inflation Data: Markets Wrap (Bloomberg) – Yahoo Finance

May 27, 2024

(Bloomberg) — Asian shares traded in a narrow range on Tuesday and the dollar fell ahead of a set of inflation data that is expected to influence the direction of global monetary policy.

Most read articles on Bloomberg

South Korean and Taiwanese shares rose. U.S. and British markets were closed on Monday and European shares rose modestly in thin trading. S&P 500 futures were up slightly in early Asian trading.

In commodity markets, gold steadied as traders awaited U.S. inflation data, while crude oil rose as focus shifted to U.S. demand with OPEC+ supply meeting on Sunday and the start of the summer driving season.

Traders will this week analyze the latest inflation data from Australia, Japan, the euro zone and the U.S. Bank of Japan Governor Kazuo Ueda and his deputy governor suggested there is room to gradually raise interest rates now that Japan has moved away from its 0% inflation benchmark. Japan’s producer prices beat expectations in April.

The dollar fell against all G10 currencies and 10-year Treasury yields also fell.

The Federal Reserve’s preferred gauge of underlying inflation is expected to show a modest easing when it is released on Friday, and Chairman Jerome Powell has stressed that he needs more evidence that inflation is heading toward his 2% target before easing policy. U.S. central bank governors John Williams, Lisa Cook, Neel Kashkari and Lori Logan are due to speak this week.

Chinese property stocks rose after financial hub Shanghai cut down payment requirements and minimum mortgage standards as major Chinese cities implemented the central government’s support for the property sector.

European stocks were in the spotlight on Monday as U.S. and British markets were closed, with automakers and utilities leading a modest gain for the Stoxx Europe 600 index. Volume was less than half the 20-day average for the time period.

ECB Governing Council member François Villeroy de Galhau said the ECB should not rule out lowering borrowing costs at both its June and July meetings, echoing other financial officials who have worried about successive rate cuts. Chief economist Philip Lane told the Financial Times that even with the prospect of a rate cut next month, the ECB would have to keep policy tight through 2024.

The ECB is widely expected to cut interest rates in June, but any steps after that are unclear given factors including uncertainty over wage growth and the conflict in the Middle East. Data due this week may show that headline inflation in the euro zone rose slightly in May.

Read more: About the “T+1” rule for US stocks to be settled on the same day: QuickTake

The “T+1” rule, which could cause problems for international investors, comes into effect when traders return from the long weekend and allows settlement of U.S. stocks to take place in one day instead of two.

Major events this week:

The IMF will hold talks with Ukrainian authorities on Monday over a review of their economic policies as Ukraine seeks to release the next tranche of $2.2 billion in aid.
Cleveland Fed President Loretta Mester speaks at a Bank of Japan event in Tokyo. Minneapolis Fed President Neel Kashkari and European Central Bank Governing Council member Klaas Nott speak at the Barclays-CEPR International Monetary Policy Forum on Tuesday.
South Africa’s general election, the most important since the end of apartheid, will be held on Wednesday.
Fed to release Beige Book economic survey on Wednesday
South African interest rate decision, US initial jobless claims, GDP, wholesale inventories on Thursday
New York Fed President John Williams speaks at the Economic Club of New York on Thursday.
GDP data for Canada, the eurozone and Türkiye was released on Friday.
Japan unemployment rate, Tokyo consumer price index, industrial production, retail sales, Friday