Asian shares exhibited a mixed tone today following a rally in the previous session, as increasing expectations of an imminent European rate cut bolstered risk appetite ahead of key inflation data releases.
Several European Central Bank officials indicated overnight that the ECB has the leeway to cut interest rates as inflation slows, reinforcing expectations for a rate cut on June 6. With discussions now shifting to future actions, markets have fully priced in two rate cuts by October this year.
This anticipation helped firm Wall Street stock futures ahead of the reopening of US markets after a public holiday. S&P 500 futures rose 0.1%, and Nasdaq futures gained 0.2%, before a series of speeches from Federal Reserve officials later in the day providing the latest guidance on the rate outlook.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4%, driven by a 0.7% gain in Hong Kong's Hang Seng index, following a 0.9% increase yesterday.
Japan's Nikkei, in contrast, slipped 0.3%, reversing some of the 0.7% advance from the previous day.
“In the absence of significant news, markets generally drift higher, which seems to be the current trend.”
Chinese blue chips fell 0.1% after a 1% gain the day before, as tech shares surged on Beijing's renewed commitment to invest in its semiconductor industry.
The major risk events this week are expected on Friday when US core personal consumption expenditures (PCE) data ― the Federal Reserve's preferred measure of inflation ― and euro zone inflation data will set the trading tone.
In foreign exchange markets, the dollar remained on the back foot for the third consecutive session as traders positioned for the PCE release. Median forecasts predict a 0.3% rise in April, maintaining the annual pace at 2.8%, with risks skewed to the downside.
The Japanese yen steadied at 156.80 per dollar, slightly stronger than the critical 157 level. However, it continued to weaken against several high-yielding currencies, with the New Zealand dollar reaching a new 17-year high of ¥96.56 today.
Driven by strong carry demand, the kiwi hit a 2-1/2-month high of US$0.6155.
The cash Treasuries market returned from a holiday with little movement after last week's hit. Two-year yields fell by 1 basis point to 4.9396%, having surged 13 bps the previous week, while the 10-year yield held steady at 4.4649%, after a 5 bps increase the week before.
Oil prices were mostly stable today, with Brent futures rising 0.1% to US$83.19 a barrel.
Gold prices climbed for the third consecutive day, up 0.1% at US$2,354.23 per ounce.
Paraphrasing text from "Reuters" all rights reserved by the original author.
