SYDNEY : Asian stocks started cautiously on Monday as investors braced for a China policy rate decision and economic data this week, while awaiting a host of U.S. Federal Reserve officials to speak to vindicate market pricing of rate cuts this year.
Early action was sluggish following a report on Friday showed U.S. consumer sentiment slumped to a six-month low in May and long-term inflation expectations jumped to the highest since 2011, boosting the U.S. dollar and Treasury yields.
In emerging markets, the Turkish lira touched a fresh two month low of 19.70 to the dollar as the country appeared headed for a runoff presidential election. The Thai Baht was 0.7 per cent stronger after the opposition secured a stunning election
win on Sunday.
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MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.16 per cent lower, while Japan’s Nikkei bucked the trend with a gain of 0.5 per cent, building on the optimism from last week during the earnings season.
Investors are keenly awaiting China’s central bank rate decision on Monday. Market watchers polled by Reuters expect the medium-term policy rate to be left unchanged despite disappointing data last week that fuelled concerns about a global slowdown.
The country is due to report monthly industrial production, retail sales and fixed asset investment data on Tuesday.
“A big year-on-year improvement shouldn’t surprise given it is measured against a stagnant economy that was in lockdown,” said Chris Weston, head of research at Pepperstone.
“However, with China’s data throwing up a few concerns of late – we’ve seen poor import, PPI, and loan data – China’s growth is very much at the heart of market moves,” said Weston.
Also this week, a host of Federal Reserve officials are speaking, with Chair Jerome Powell set for Friday, and could generate plenty of headlines to move the dial further.
Source: Reuters
