(Bloomberg) — Asian stocks tracked gains in 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 Australia, South Korea and Japan posted modest gains on Monday, while futures for Hong Kong equities also gained. Contracts for US stocks were little changed in early Asian trading.
The renewed optimism came after a gauge of Asian stocks suffered their worst week in more than a month. The moves came as concerns over whether the Fed will cut this year mounted along with doubts over the implementation and effectiveness of a property rescue package in China.
“Given the rebound in US markets, you’ll see Asian bourses open reasonably well,” said Tony Sycamore, an analyst at IG Markets in Sydney. “Risk sentiment looks reasonably good today.”
In Japan, the yen traded slightly stronger against the dollar as Bank of Japan Governor Kazuo Ueda said Monday that the central bank’s challenge is to determine the neutral interest rate. 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.
The dollar edged lower in Asia on Monday while the trading of cash Treasuries was closed. With US markets closed Monday, the “T+1” rule will come into effect when traders come back from the holiday weekend — making US equities settle in one day rather than two.
Read More: About the ‘T+1’ Rule Making US Stocks Settle in a Day: QuickTake
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.
“A firmer Eurozone reading will not deter expectations for rate cut on June 6,” said Marc Chandler, chief market strategist at Bannockburn Global. “Nor will a higher Tokyo print impact expectations for the BOJ.”
In commodities, oil steadied after a weekly loss, with the focus on an OPEC+ supply meeting on Sunday and US demand at the start of the summer driving season. Elsewhere, gold was little changed Monday following its worst week since September.
Some of the main moves in markets:
Stocks
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S&P 500 futures were little changed as of 9:19 a.m. Tokyo time
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Hang Seng futures rose 0.4%
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Japan’s Topix rose 0.2%
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Australia’s S&P/ASX 200 rose 0.6%
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Euro Stoxx 50 futures were unchanged
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was unchanged at $1.0847
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The Japanese yen rose 0.1% to 156.83 per dollar
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The offshore yuan was little changed at 7.2611 per dollar
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The Australian dollar was little changed at $0.6627
Cryptocurrencies
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Bitcoin fell 0.1% to $68,580.35
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Ether fell 0.5% to $3,839.12
Bonds
Commodities
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West Texas Intermediate crude rose 0.2% to $77.88 a barrel
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Spot gold rose 0.1% to $2,336.21 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Matthew Burgess.
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