Asian stocks inched higher on Tuesday as the dollar slipped ahead of a swath of inflation prints that are expected to influence the direction of global monetary policy. The MSCI AC Asia Pacific index rose, with stocks in Hong Kong leading gains in Asia. Markets in Japan and Australia were slightly down. US and UK markets were closed on Monday and European shares edged higher in thin trading. S&P 500 futures rose.
Chinese property shares advanced after the financial hub of Shanghai lowered down-payment ratios and the minimum mortgage threshold, as bigger Chinese cities follow through on the central government’s aid for the property sector. Tech stocks in China gained as major Chinese state banks said they will invest a combined 114 billion yuan ($15.7 billion) into a semiconductor investment fund.
The dollar retreated for a third day and was down against all Group-of-10 peers, while the 10-year Treasury yield remained stable.
Traders will this week be studying fresh inflation data from Australia to Japan, the euro region and the US. Bank of Japan Governor Kazuo Ueda and his deputy indicated there is scope for gradually raising interest rates now that the nation has shifted away from an inflation norm of 0%. Japan’s April producer prices beat estimates, jumping 2.8% from a year earlier.
In commodities, gold steadied as traders awaited US inflation data. Oil advanced as focus shifted to an OPEC+ supply meeting on Sunday and US demand at the start of the summer driving season. Copper resumed its rally as China steps up efforts to rescue its property market and as the dollar weakened. Wheat briefly touched the highest level in more than nine months on concerns over shrinking stockpiles.
With US and UK markets closed Monday, European stocks took the spotlight, with carmakers and utilities leading a modest advance in the Stoxx Europe 600 index. Turnover was less than half the 20-day average for the time of day.
The ECB shouldn’t rule out lowering borrowing costs at both its June and July meetings, Governing Council member Francois Villeroy de Galhau said, pushing back against fellow monetary officials uncomfortable with the idea of consecutive cuts. Chief Economist Philip Lane told the Financial Times the central bank will have to keep policy restrictive through 2024, even with the prospect of an interest-rate cut next month.
While an ECB rate cut in June has been widely telegraphed, subsequent steps are less clear given uncertainty over wage growth and factors like the fighting in the Middle East. Data this week may show headline inflation in the euro region ticked up in May.