Stocks Climb, Dollar Slips on Hopes for Fed Easing: Markets Wrap

(Bloomberg) — Asian stocks rose while the dollar weakened amid bets that the Federal Reserve will cut interest rates this year, with U.S. inflation data due this week likely to signal a release of pressure on prices.

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Stock markets in Hong Kong, China, Australia, South Korea and Japan rose Monday, while U.S. stock futures were little changed. The Australian dollar, euro and yen appreciated against the dollar as Bank of Japan Deputy Governor Shinichi Uchida said the end of the battle against deflation was in sight.

Global investors are hoping the Fed, along with the European Central Bank and its peers, will cut interest rates this year. This, along with strong corporate earnings and signals from U.S. officials that further rate hikes are unlikely, has boosted investor confidence.

While economists now expect fewer Fed cuts than before, “the markets have said – whatever – we have higher earnings numbers,” said Shane Oliver of AMP Capital Markets Ltd. in an interview with Bloomberg Television. “This allowed the markets to continue to operate.”

A raft of inflation figures from Australia to Japan, the euro zone and the United States are due this week as traders place fine bets on the outlook for monetary policy.

The ECB is widely expected to cut rates for the first time since concluding an unprecedented tightening campaign at its June meeting. But U.S. officials are moving more slowly toward changing course, with Fed Chairman Jerome Powell emphasizing the need for more evidence that inflation is on a sustained path toward its 2% target before lowering the political reference.

Wall Street saw some relief last week, however, when figures from the University of Michigan showed that consumers expected prices to rise more slowly than previously reported.

“Risk sentiment is upbeat after lower inflation expectations” thanks to U.S. data, said Charu Chanana of Saxo Capital Markets.

The Federal Reserve’s front-line inflation gauge, due Friday, is expected to show a slight relief from stubborn price pressures. John Williams, Lisa Cook, Neel Kashkari and Lorie Logan are among the US central bankers who will speak.

Read more: About the ‘T+1’ rule that allows US stocks to settle in one day: QuickTake

Trading in spot Treasury bills was closed. The British and American markets are closed on Monday for holidays. This means that the “T+1” rule, which could potentially cause problems for foreign investors, will come into effect when traders return from the long weekend, causing U.S. stocks to settle in one day rather than in two.

The story continues

In the commodities sector, oil and gold rose. This year has seen a series of surges in commodity prices due to supply constraints, growing demand and even some speculative activity. The Organization of the Petroleum Exporting Countries and its partners are expected to meet online on June 2 to discuss supply cuts.

Some notable events this week:

• ECB’s Philip Lane speaks on inflation in Dublin on Monday

• The IMF is talking to Ukrainian authorities on Monday to review their economic policies as the country seeks to release the next tranche of $2.2 billion in aid.

• Cleveland Fed President Loretta Mester speaks at BOJ event in Tokyo; Minneapolis Fed President Neel Kashkari and ECB Governing Council member Klaas Knot will address the Barclays-CEPR International Monetary Policy Forum on Tuesday.

• South African elections, the most significant since the end of apartheid, on Wednesday

• The Fed publishes its economic survey in the Beige Book on Wednesday

• South Africa rate decision, US initial jobless claims, GDP, wholesale stocks, Thursday

• New York Fed President John Williams speaks at the Economic Club of New York on Thursday.

• GDP data released Friday for Canada, Eurozone and Turkey

• Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday

Some of the main market movements:

Actions

• S&P 500 futures were little changed as of 12:22 p.m. Tokyo time

• Nikkei 225 (OSE) futures rose 0.3%

• The Japanese Topix rose 0.3%

• Australia’s S&P/ASX 200 rose 0.7%

• Hong Kong’s Hang Seng rose 0.4%

• The Shanghai Composite rose 0.3%

• Euro Stoxx 50 futures fell 0.1%

Currencies

• Bloomberg Dollar Spot Index little changed

• The euro was little changed at $1.0850

• The Japanese yen rose 0.1% to 156.76 per dollar

• The offshore yuan was little changed at 7.2572 per dollar.

Cryptocurrencies

• Bitcoin rose 0.5% to $69,016.01

• Ether rose 1.7% to $3,924.89

Obligations

Raw materials

• West Texas Intermediate crude rose 0.3% to $77.97 a barrel

• Spot gold rose 0.5% to $2,344.94 an ounce

This story was produced with the help of Bloomberg Automation.

–With help from Matthew Burgess.

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