Asian stocks climbed on Wednesday while the dollar remained subdued as traders assessed mixed U.S. producer price data and awaited the crucial consumer price report later in the day, which could sway the Federal Reserve's policy decisions.
MSCI's broadest index of Asia-Pacific shares outside Japan advanced by 0.38%, hitting a new 15-month high earlier in the session. Japan's Nikkei also saw gains of 0.58%.
Overnight data revealed that U.S. producer prices rose more than anticipated in April, indicating persistent inflation at the beginning of the second quarter.
Federal Reserve Chair Jerome Powell, speaking at a banking event in Amsterdam, characterized the PPI data as "mixed" rather than "hot," citing downward revisions in prior data.
Investors have recalibrated their expectations of U.S. rate cuts for this year due to lingering inflation, now pricing in a 43 basis point easing compared to the 150 basis points anticipated earlier in 2024.
Ryan Brandham, head of global capital markets, North America at Validus Risk Management, noted that while market anticipation of rate cuts has been rising based on weaker-than-expected U.S. labor market data, hopes for rate cuts could be dashed if prices do not follow suit.
All attention is now focused on Wednesday's U.S. consumer prices report, which is forecasted to show a 0.3% month-on-month increase in April, down from the 0.4% growth recorded the previous month according to a Reuters poll.
The Nasdaq achieved a record closing-high on Tuesday, with the S&P 500 and the Dow also seeing gains, boosted by Powell's comments suggesting that the next interest rate move by the central bank is unlikely to be a hike.
Popular retail stocks GameStop and AMC surged overnight amid speculation fueled by posts from "Roaring Kitty" Keith Gill, reigniting memories of the 2021 meme stock frenzy.
In China, stocks saw a slight dip in early trading, with the blue-chip index down 0.16%, while Hong Kong's Hang Seng Index fell 0.22%.
U.S. President Joe Biden unveiled a series of significant tariff increases on various Chinese imports, including electric vehicles, computer chips, and medical products.
In the currency market, the dollar remained under pressure as traders hesitated to make moves ahead of the CPI report, while the euro hovered near its one-month peak at $1.0817.
The dollar index, which measures the U.S. currency against six peers, stood at 105.01. The yen was at 156.36 per dollar, touching a two-week low of 156.80 on Tuesday, with traders wary of potential interventions from Japanese authorities.
Commodities saw oil prices inching higher due to wildfires threatening Canada's oil sands and expectations of a drawdown in U.S. crude oil and gasoline inventories later in the day. U.S. crude stood at $82.71 per barrel, up 0.4%, while Brent was at $78.39 per barrel, up 0.5%.
Spot gold remained relatively unchanged at $2,356.79 per ounce.
Paraphrasing text from "Reuters" all rights reserved by the original author.
