(Bloomberg) — Asian stocks tracked gains in their US peers as an easing in US consumer inflation expectations bolstered the case for the Federal Reserve to cut rates this year.
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Markets in Hong Kong, China, Australia, South Korea and Japan advanced on Monday. US equity futures were little changed.
The renewed optimism comes after a gauge of Asian stocks suffered their worst week in more than a month. The losses were fueled by doubts over whether the Fed will cut rates this year along with concerns over the implementation and effectiveness of a property rescue package in China.
In Japan, the yen traded slightly stronger against the dollar as Bank of Japan Governor Kazuo Ueda said Monday the central bank will move cautiously to anchor inflation expectations at 2%. The yen fluctuated around 157 per greenback, as markets priced in a chance of another rate hike by the BOJ this year.
Wall Street got a degree of relief as University of Michigan data showed consumers expect prices to climb at a 3.3% annual rate over the next year, down from the 3.5% expected earlier in the month. Later this week, the Federal Reserve’s first-line inflation gauge – due on Friday— is set to show some modest relief from stubborn price pressures.
Federal Reserve Chair Jerome Powell and his colleagues have stressed the need for more evidence that inflation is on a sustained path to their 2% goal before cutting the benchmark interest rate, which has been at a two-decade high since July.
Read More: About the ‘T+1’ Rule Making US Stocks Settle in a Day: QuickTake
The dollar edged lower in Asia on Monday while the trading of cash Treasuries was closed. With US markets closed Monday for the Memorial Day holiday, the “T+1” rule will come into effect when traders come back from the long weekend — making US equities settle in one day rather than two.
Among the US central bankers speaking during the holiday-shortened week are John Williams, Lisa Cook, Neel Kashkari and Lorie Logan.
Elsewhere this week, investors will pay close attention to China industrial profits and PMI data to help gauge the health of the world’s second largest economy. A swath of inflation prints from Australia to Japan and the Eurozone are also due as traders finesse bets on the outlook for monetary policy.
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In commodities, oil and gold nudged up. This year has witnessed a rolling series of commodity price spikes thanks to supply constraints, surging demand and even some speculative activity. The Organization of Petroleum Exporting Countries and its partners are set to gather online on June 2 to discuss supply cuts.
Some key events this week:
ECB’s Philip Lane speaks in Dublin on inflation, Monday
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 10:26 a.m. Tokyo time
Nikkei 225 futures (OSE) rose 0.3%
Japan’s Topix rose 0.2%
Australia’s S&P/ASX 200 rose 0.6%
Hong Kong’s Hang Seng gained 0.4%
The Shanghai Composite rose 0.2%
Euro Stoxx 50 futures fell 0.1%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0850
The Japanese yen rose 0.1% to 156.76 per dollar
The offshore yuan was little changed at 7.2584 per dollar
Cryptocurrencies
Bitcoin was little changed at $68,734.51
Ether fell 0.4% to $3,843.35
Bonds
Commodities
West Texas Intermediate crude rose 0.2% to $77.87 a barrel
Spot gold rose 0.2% to $2,338.41 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Matthew Burgess.
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