Asian shares rose and the safe-haven dollar edged lower on Tuesday as investors hoped this week’s U.S. inflation data supports an imminent end to rate hikes and cheered the prospect China will deliver economic stimulus to prop up stalling growth.
Markets are awaiting U.S. inflation data due on Wednesday to see if price pressures are continuing to moderate, which could provide clues on the interest rate outlook.
European markets were set for a higher open, with pan-region Euro Stoxx 50 futures up 0.26%, German DAX futures rising 0.37% and FTSE futures down 0.02%.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was up 1.6%, while U.S. stock futures, the S&P 500 e-minis , rose 0.07%.
Investors were digesting comments from several Federal Reserve officials on Monday who said while additional rate hikes are needed to bring down inflation, the end to the central bank’s current monetary policy tightening cycle is getting close.
“U.S. CPI will be coming into focus, with the associated event risk potentially adding to the vibe,” ANZ analysts said in a note.
Australian shares (.AXJO) edged up 1.23%, while Japan’s Nikkei stock index (.N225) rose 0.14%.
China’s blue-chip CSI300 index (.CSI300) was 0.63% higher in afternoon trade. Hong Kong’s Hang Seng index (.HSI) advanced 1.75%.
Data showing a steeper-than-expected decline in Chinese producer prices on Monday suggests the country’s “post-COVID rebound has run out of steam” but added to expectations that “policy makers may need to do more to shore up demand,” said ANZ analysts.
Chinese regulators on Monday extended some policies in a rescue package introduced in November to shore up liquidity in the embattled real estate sector.
Analysts said while the extended policy could ease short-term financial pressure on property developers and ensure their home project completions, new measures would be needed to tackle the cash crunch in the sector.
The current measures are “unlikely to sufficiently stimulate home purchases and rescue the property sector,” wrote Ting Lu, chief China economist at Nomura. “Beijing may need to take more action to arrest the downward spiral.”
On Monday, U.S. stocks ended higher following last week’s losses while Fed officials’ comments bolstered the view that the U.S. central bank may be near the end of its tightening cycle.
On Wall Street, the Dow Jones Industrial Average (.DJI) rose 0.62%, the S&P 500 (.SPX) gained 0.24% and the Nasdaq Composite (.IXIC) added 0.18%.
S&P 500 company earnings are due to kick off this week with reports from some big U.S. banks. Analysts expect earnings to have fallen 6.4% in the second quarter year-on-year, IBES data from Refinitiv showed.
In U.S. Treasuries, the yield on benchmark 10-year Treasury notes reached 3.9879% compared with its U.S. close of 4.006% on Monday. The two-year yield , which rises with traders’ expectations of higher Fed fund rates, touched 4.8515% compared with a U.S. close of 4.862%.
The Fed comments knocked the greenback to a two-month low of 101.75 against a basket of currencies in early Asia trade, as investors pared expectations of how much further U.S. interest rates have to rise.
The Japanese yen rose to a near one-month high of 141.15 per dollar on Tuesday and last bought 140.735 per dollar, drawing support from a slump in U.S. Treasury yields.
U.S. crude ticked up 0.66% to $73.47 a barrel. Brent crude rose 0.58% to $78.14 per barrel.
Gold was slightly higher. Spot gold was traded at $1929.59 per ounce.
Source: Reuters
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