Asian stocks cautious ahead of key US indicators
Markets in Japan posted early gains while those in Australia edged lower as they reopened after a public holiday. Futures in Hong Kong were little changed. Traders are bracing for volatility ahead of US macroeconomic catalysts, while political uncertainty in Europe also kept a lid on equities.
Asian stocks were muted in early trade, following a subdued session on Wall Street as investors positioned for this week’s Federal Reserve decision and US inflation data.
Markets in Japan posted early gains while those in Australia edged lower as they reopened after a public holiday. Futures in Hong Kong were little changed. Traders are bracing for volatility ahead of US macroeconomic catalysts, while political uncertainty in Europe also kept a lid on equities.
Australia’s 10-year bond yield jumped early Tuesday, mainly catching up with Friday’s move in US Treasuries as traders pushed out their timeline for Fed interest-rate cuts. The dollar edged higher against most of its Group-of-10 peers.
Wall Street’s most-prominent trading desks from JPMorgan Chase & Co. to Citigroup Inc. are urging investors to prepare for a potential stock market jolt after this Wednesday’s consumer price index and the US rate decision.
The Fed is widely expected to keep borrowing costs on hold, but there’s less certainty on officials’ rate projections. A 41% plurality of economists expect policymakers to signal two cuts in their “dot plot” while an equal number expect the forecasts to show just one or no cuts at all.
“The interest-rate guessing game goes on,” said Chris Larkin at E*Trade from Morgan Stanley. “Even the friendliest inflation numbers probably won’t push the Fed to act any sooner than September.”
The S&P 500 rose 0.3% to close at a fresh record high Monday. Nvidia Corp. began trading after a 10-for-one stock split. GameStop Corp. slumped 12%.
Apple Inc. sank even after unveiling new artificial-intelligence features. European shares slid after French President Emmanuel Macron called a legislative vote in the wake of a crushing defeat in European Parliament elections. Yields on France’s 10-year bonds hit their highest this year, while the nation’s top banks tumbled.
The Treasury market saw small moves as a weak $58 billion three-year auction knocked sentiment ahead of Tuesday’s $39 billion 10-year sale.
“The release of a new ‘dot plot’ outlining Fed projections for the path of rates will be the top focus,” said Jason Pride and Michael Reynolds at Glenmede. “For fixed-income investors, the Fed’s more patient higher-for-longer approach is likely to keep bond yields elevated as inflationary pressures remain.”
In Asia, traders are digesting Monday’s data that showed Japan’s gross domestic product shrank at an annualized pace of 1.8% in the three months through March. The figures showed both consumers and companies cutting back on spending and unsold supplies building up on warehouse shelves as the strongest inflation trend in decades continues to crimp outlays in real terms.
More than 60% of respondents in the latest MLIV Pulse survey expect US stocks to outperform Treasuries on a volatility-adjusted basis next month. That reading has been higher only three times in the history of the survey going back to August 2022.
Also Read: Trade Setup for June 11: Does Nifty have the legs to reach 23,500? Action turns to specific stocks
Markets in Japan posted early gains while those in Australia edged lower as they reopened after a public holiday. Futures in Hong Kong were little changed. Traders are bracing for volatility ahead of US macroeconomic catalysts, while political uncertainty in Europe also kept a lid on equities.
Australia’s 10-year bond yield jumped early Tuesday, mainly catching up with Friday’s move in US Treasuries as traders pushed out their timeline for Fed interest-rate cuts. The dollar edged higher against most of its Group-of-10 peers.
Wall Street’s most-prominent trading desks from JPMorgan Chase & Co. to Citigroup Inc. are urging investors to prepare for a potential stock market jolt after this Wednesday’s consumer price index and the US rate decision.
The Fed is widely expected to keep borrowing costs on hold, but there’s less certainty on officials’ rate projections. A 41% plurality of economists expect policymakers to signal two cuts in their “dot plot” while an equal number expect the forecasts to show just one or no cuts at all.
“The interest-rate guessing game goes on,” said Chris Larkin at E*Trade from Morgan Stanley. “Even the friendliest inflation numbers probably won’t push the Fed to act any sooner than September.”
In commodities, oil pushed higher after posting the biggest gain in four months on Monday, ahead of an OPEC report that will provide a snapshot on the outlook for supply and demand.
The S&P 500 rose 0.3% to close at a fresh record high Monday. Nvidia Corp. began trading after a 10-for-one stock split. GameStop Corp. slumped 12%.
Apple Inc. sank even after unveiling new artificial-intelligence features. European shares slid after French President Emmanuel Macron called a legislative vote in the wake of a crushing defeat in European Parliament elections. Yields on France’s 10-year bonds hit their highest this year, while the nation’s top banks tumbled.
The Treasury market saw small moves as a weak $58 billion three-year auction knocked sentiment ahead of Tuesday’s $39 billion 10-year sale.
“The release of a new ‘dot plot’ outlining Fed projections for the path of rates will be the top focus,” said Jason Pride and Michael Reynolds at Glenmede. “For fixed-income investors, the Fed’s more patient higher-for-longer approach is likely to keep bond yields elevated as inflationary pressures remain.”
In Asia, traders are digesting Monday’s data that showed Japan’s gross domestic product shrank at an annualized pace of 1.8% in the three months through March. The figures showed both consumers and companies cutting back on spending and unsold supplies building up on warehouse shelves as the strongest inflation trend in decades continues to crimp outlays in real terms.
More than 60% of respondents in the latest MLIV Pulse survey expect US stocks to outperform Treasuries on a volatility-adjusted basis next month. That reading has been higher only three times in the history of the survey going back to August 2022.
Also Read: Trade Setup for June 11: Does Nifty have the legs to reach 23,500? Action turns to specific stocks
(Edited by : SonalMohan Jadhav)
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