Asian stocks declined, shrugging off Wall Street’s gains, as the double-whammy of an upcoming US inflation report and the Federal Reserve decision kept traders on edge. Hong Kong’s equity benchmark fell more than 1%, with auto shares leading the decline ahead of Europe’s tariff decision. Stocks also dropped in Japan while those in India climbed. Contracts for US shares were little changed after the S&P 500 closed at a new high, buoyed by a rally in Apple Inc. Treasuries steadied after rising on a solid $39 billion sale, which reflected speculation that Wednesday’s inflation reading will help make the case for the Fed to cut rates this year. Demand in an auction of 10-year debt was strong, with the bid-to-cover ratio of 2.67 being the highest since February 2022. Australian bonds nudged higher. In key Asian data, China’s consumer price gains held above zero in May while factory-gate prices remained stuck in deflation, fueling concerns over persistently weak demand. Separately, the Biden administration is said to be considering further restrictions on China’s access to chip technology used for artificial intelligence. US monetary policy continues to be the single most critical input for traders in Asia even with India’s post-election volatility, central banks in Japan and Taiwan gearing up for their own rate decisions and various Southeast Asian currencies testing key support levels. A Bloomberg index of dollar strength steadied near this year’s high. Asian currencies traded in tight ranges against the greenback. The Fed is widely expected to hold borrowing costs at a two-decade high on Wednesday, but there’s less certainty on officials’ quarterly rate projections, known as the “dot plot.”
The projections “could potentially be a major market moving event especially if the dots only show one rate cut in 2024 instead of two which seems to be the street consensus view,” said Nomura strategist Chetan Seth. The new dot plot likely will indicate two 25-basis-point cuts this year, compared with three in the March version, according to Bloomberg Economics. The economists expect the May CPI print to give the Fed some additional reassurance that inflation is slowing. In commodities, oil held a two-day gain after industry data pointed to shrinking US crude stockpiles ahead of a report from the IEA on the market outlook. Copper rose from its lowest close in seven weeks. US After Hours ORCL +10.5% higher on earnings and partnerships; CASY +6.4% higher on earnings
Nikkei -0.52% Hang Seng -1.19% CSI +0.04% Shanghai +0.29% Shenzen +0.59%
Eur$ 1.0738 CNH 7.2693 CNY 7.2536 JPY 157.21 GBP 1.2740 CHF 0.8978 RUB 89.2472 TRY 32.3820 WTI$ 78.33 +0.55% Gold 2,314 -0.14% BTC 67,525 +0.36% ETH 3,523 +1.01%
S&P +0.06% Nasdaq +0.10% EuroStoxx +0.36% FTSE +0.44% Dax +0.33% SMI +0.32%
Macro :
- G7 Nations to Express Concerns on Chinese Overcapacity: Nikkei
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