Asian shares in favor of China data, Fed speaker

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SYDNEY – Asian stocks started the week with caution as investors braced for China’s retail and industrial data releases, while awaiting a flurry of Federal Reserve officials. The US speaks to justify the market price for a rate cut this year.

Both S&P 500 and Nasdaq futures fell 0.1% in early trading, following a report on Friday showing US consumer sentiment fell to a six-month low in May and Long-term inflation expectations rose to their highest levels since 2011, boosting the US dollar and Treasury yields.

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In emerging markets, the Turkish lira fell to a two-month low after the election weekend looked set to come, while the Thai baht gained nearly 1% after the opposition of Thailand beat the military coalition parties also in the polls over the weekend.

On Monday, MSCI’s broadest index of Asia-Pacific shares outside Japan fluctuated between losses and gains and ended up rising 0.1%. Japan’s Nikkei index bucked the trend with a 0.5% gain, building on optimism from last week during earnings season.

China’s blue-chip index was flat in early trade, after sliding 2% last week, while Hong Kong’s Hang Seng index rose 0.3%, also falling 2.1%.

The country’s central bank on Monday extended maturing medium-term policy loans while leaving interest rates unchanged, despite disappointing data last week that raised fears of a global recession. bridge.

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China will report monthly industrial production, retail sales and fixed-asset investment data on Tuesday.

Chris Weston, head of research at Pepperstone, said: “It’s not surprising that there was a big improvement over the same period last year as it was measured against the backdrop of a sluggish economy under lockdown.

“However, with China data raising some concerns recently – we have seen poor import, PPI and loan data – Chinese growth is at the heart of market moves.” Weston said.

Also this week, a slew of Federal Reserve officials will speak, with Chairman Jerome Powell set for Friday, and could make plenty of headlines to push the dial further. .

Markets are still viewing this as the top for the Fed funds rate and pricing 70 basis points in a cut later this year, after last week’s CPI and PPI data backed the case for a Fed pause due to slowing inflation.

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Fed Governor Michelle Bowman said on Friday that the US central bank will likely need to raise interest rates further if inflation remains high.

Joseph Capurso, head of international economics at Commonwealth Bank of Australia, believes persistent US inflation will eliminate pricing possibilities for a short-term Fund rate cut and contribute to dollar recovery in the coming months.

The US dollar hovered around a five-week high against major currencies on Monday, extending its best weekly gain since September from the previous week. It was at 102.64, after rising 1.4% last week on concerns about global growth.

What worries investors most is the uncertainty about the lifting of the US debt ceiling and the return of banking worries. US President Joe Biden is scheduled to meet with congressional leaders on Tuesday for talks aimed at raising the national debt ceiling and avoiding a catastrophic default.

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Concerns about the US Congress not raising the debt ceiling on time have created major short-term distortions of the yield curve as investors avoid bills coming due as Treasuries run the risk of running out of money. money and pour money into bonds instead.

The benchmark 10-year yield was little changed at 3.4588%, after rising 6 basis points on Friday and the two-year yield fell 2 basis points to 3.9830%, also up 10 points. base in the previous session.

Oil prices fell for the fourth consecutive session. US crude oil futures fell 0.5% to $69.71 a barrel, while Brent crude futures fell 0.6% to $73.74 a barrel.

Gold prices were 0.2 percent higher at $2,014.95.49 an ounce.

(Reporting by Stella Qiu; Editing by Sonali Paul)