Asian shares edged higher on Monday as investors prepared for a busy week of data releases, culminating in a crucial U.S. inflation report that could hint at a future interest rate cut, though not for a few months yet.
Thin trading prevailed due to holidays in the United States and UK, ahead of Friday's core personal consumption expenditures (PCE) figures, the Federal Reserve's preferred inflation measure. Median forecasts predict a 0.3% rise in April, maintaining the annual pace at 2.8%, with potential downside risks.
"Consumer and producer price data suggest core PCE inflation lost further momentum in April after a strong start to the year. We expect the core index to increase by 0.22% month-on-month, down from 0.32% in March and an initial 0.25% estimate," analysts at TD Securities noted.
"We also anticipate the headline index will rise 0.23% month-on-month, while the super core likely cooled to 0.26%."
Euro zone inflation figures are also due on Friday, with an expected rise to 2.5% not expected to deter the European Central Bank from easing policy next week.
Over the weekend, policymakers Piero Cipollone and Fabio Panetta both indicated a forthcoming cut, while markets suggest an 88% chance of easing to 3.75% on June 6.
The Bank of Canada might also ease next week, while the Fed is expected to wait until September for its first move.
At least eight Fed officials are scheduled to speak this week, including two appearances by the influential New York Fed President John Williams.
On Monday, the Bank of Japan’s head and deputy head, along with the ECB's chief economist, will speak. The BOJ's policy meeting on June 14 might diverge from the global trend and hike rates again, though modestly to 0.15%.
The prospect of lower borrowing costs globally has been positive for equities and commodities, though many markets experienced profit-taking last week.
MSCI's broadest index of Asia-Pacific shares outside Japan increased by 0.1%, after slipping 1.5% last week and retreating from a two-year peak.
Japan's Nikkei rose 0.3%, ahead of a Tokyo consumer prices reading later this week.
S&P 500 futures remained flat, while Nasdaq futures dipped 0.1% after hitting record highs last week following Nvidia's earnings beat.
Nvidia has accounted for a quarter of the S&P 500's gains this year, while the "Magnificent 7" tech giants are up 24% for the year.
In currency markets, attention focused on the yen and the risk of Japanese intervention as it approached the 160.00 level. The dollar stood at 156.89 yen, having gained 0.9% last week, close to its recent high of 160.245.
Japan renewed efforts to counter excessive yen declines during a weekend G7 finance leaders meeting, after a recent rise in bond yields to a 12-year high failed to slow the yen’s decline.
The euro was steady at $1.0845, just shy of its recent high of $1.0895.
Gold held at $2,337 an ounce, after dropping 3.4% last week, off an all-time peak of $2,449.89.
Oil prices remained near four-month lows amid demand concerns as the U.S. driving season begins this week. Investors await the OPEC+ online meeting on June 2 to see if new production cuts will be debated, though analysts doubt consensus will be reached. Brent was up 5 cents at $82.17 a barrel, while U.S. crude rose 9 cents to $77.81 per barrel.
Paraphrasing text from "Reuters" all rights reserved by the original author.
