Home Front end Asian stocks rise slightly from near two-year lows ahead of US inflation data

Asian stocks rise slightly from near two-year lows ahead of US inflation data

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A currency trader works in a trading room of a bank in Seoul, South Korea August 25, 2015. REUTERS/Kim Hong-Ji

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HONG KONG, May 11 (Reuters) – Asian stocks edged higher on Wednesday after hitting near two-year lows in the previous session and the dollar held steady, ahead of much-anticipated U.S. inflation data that will offer a guide to the aggressiveness of the United States. The Fed will raise rates.

MSCI’s broadest Asia-Pacific ex-Japan equity index (.MIAPJ0000PUS) rose 0.45%, trading slightly above its lowest level since July 2020 touched the previous day. The Japanese Nikkei (.N225) gained 0.3%.

China’s blue chips (.CSI300) led the gains, rising 1.5% after producer prices in the world’s second-largest economy rose at the slowest pace in a year in April, giving way to more stimulus to shore up an economy facing pressure from COVID-19 restrictions. Read more

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Strict restrictions to fight the coronavirus have weighed on the Chinese economy. As of Tuesday, 41 Chinese cities were currently implementing full or partial lockdowns or some sort of district-based control measures, according to Nomura analysts’ estimates.

They estimated that about 289.8 million people are currently affected by these lockdown measures in regions that account for about 33.8 trillion yuan ($5.02 trillion) of China’s total GDP, down slightly. compared to last week’s 327.9 million and 35.4 trillion yuan.

But the main event scheduled for the day is US inflation data, due at 12:30 GMT, which will indicate whether the US Federal Reserve will raise rates even more aggressively to fight inflation.

Last week, the Fed raised its overnight interbank lending target by half a percentage point, and Chairman Jerome Powell said two more such rate hikes are likely in upcoming policy meetings. the US central bank.

There has also been speculation in the markets that the Fed will have to make a massive 75 basis point hike at a meeting.

This pushed up US Treasury yields and supported the dollar.

“A positive surprise (in the CPI data) will encourage markets to raise prices for a 75 bp fund rate hike later in the year and support the dollar, while a negative surprise will keep prices up. for 50 basis point increases in June and July untouched and will leave the dollar stable,” the ABC analysts said in a note.

Analysts anticipate the US consumer price index

They also predict an 8.1% annual increase, 0.4 percentage points lower than the previous 8.5%, which was the warmest reading since December 1981.

The dollar index, which measures the greenback against six major peers, held steady at 103.86, not far from the high of 104.49 hit earlier this week for the first time since December 2002.

Wall Street was mixed overnight. The Nasdaq (.IXIC) rose 0.98% and the S&P 500 (.SPX) gained 0.25% but the Dow Jones Industrial Average (.DJI) fell 0.26%.

US Treasuries were also calm ahead of the data. The yield on the benchmark 10-year note was flat at 2.9869%, after falling overnight from a three-year high.

Early in the curve, the US two-year yield, which often mirrors the Fed’s rate outlook, was little changed at 2.68%.

Bitcoin was trading around $31,400 after recording a small rally after falling below $30,000 on Tuesday for the first time since July 2021.

Oil rebounded from the previous day’s declines.

U.S. crude rose 1% to $100.03 a barrel, after falling below $100 on Tuesday for the first time this month. Brent rose 1.1% to $103.58.

Spot gold fell 0.1% to $1,836.6 an ounce.

($1 = 6.7338 yuan)

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Reporting by Alun John; Editing by Muralikumar Anantharaman

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