SYDNEY- Asian shares stalled short of seven-month highs on Monday as investors awaited inflation data from the United States, Japan and Europe that will help refine expectations for future rate moves.
The Federal Reserve’s favored measure of inflation – the core personal consumption expenditures (PCE) price index – is due on Thursday and forecasts are for a rise of 0.4 percent .
It was not long ago investors were hoping for just a 0.2 percent increase but high readings on consumer and producer prices suggest the risk is for a result as high as 0.5 percent .
Markets have already pushed out the likely timing of a first Fed easing from May to June, which is currently priced at around a 70 percent probability. Futures imply a little more than three quarter-point cuts this year, compared to five at the start of the month.
There are at least 10 Fed speakers on the docket this week, and are likely to repeat their mantra of staying cautious on rates. The ISM manufacturing survey is due on Friday, as are PMIs for China.
Despite the hawkish shift, Wall Street still managed to make new highs helped by huge gains for AI diva Nvidia which added $277 billion in market value last week.
“This may be a catalyst not only for the Street to get materially more bullish on US Equities but also to see a further decoupling of stocks and yields since the Mag7 are proving to deliver on earnings expectations irrespective of the interest rate environment,” wrote analysts at JPMorgan in a note, referring to the so-called “Magnificent Seven” top tech stocks.
On Monday, S&P 500 futures and Nasdaq futures were both trading 0.2 percent lower.
EUROSTOXX 50 futures and FTSE futures both eased 0.2 percent .
MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.3 percent, having climbed 1.7 percent last week to seven-month highs.
Those past gains were helped in large part by a rally in Chinese stocks, which have jumped almost 10 percent in as many sessions on hopes for more aggressive stimulus. Blue chips were off 0.5 percent on Monday.
Japan’s Nikkei rose 0.3 percent , having climbed 1.6 percent last week to clear its previous record high as bulls look to test the 40,000 barrier.
Figures on Japanese consumer prices are due out on Tuesday and are forecast to show core inflation slowed to 1.8 percent in January, the lowest since March 2022. – Reuters
