For free, real-time breaking news alerts sent straight to your inbox, sign up for our breaking news emails
Sign up for our free breaking news emails
Asian stocks were mostly higher on Tuesday, with investors mostly focused on a U.S. inflation report and what it means for interest rate cuts by the Federal Reserve.
Oil prices rose while US futures were mixed. The yen weakened and neared a 34-year low.
Japan's benchmark Nikkei 225 rose 1.1% to 39,773.13 in morning trade. The yen weakened while the U.S. dollar rose to 151.88 Japanese yen, approaching a 34-year high of 151.97 yen reached in late March.
Hong Kong's Hang Seng rose for a second day, rising 0.7% to 16,856.41, while the Shanghai Composite Index slipped 0.2% to 3,041.30.
In South Korea, the Kospi fell 0.3% to 2,710.41 and Australia's S&P/ASX 200 gained 0.4% to 7,822.40.
An update to the U.S. consumer price index is due later on Wednesday.
“The positive sentiment emerging from Friday's jobs report, which saw indices soar after wage growth data suggested inflation pressures had been contained, has set the stage for a white knuckle event as the release approaches of the consumer price index will be larger than life,” said Stephen Innes, managing partner at SPI Asset Management.
U.S. stock indexes were virtually at a standstill on Monday as trading calmed after falling slightly short of records after a turbulent few days.
The S&P 500 fell less than 0.1% to 5,202.39. The Dow Jones Industrial Average fell less than 0.1% to 38,892.80, while the Nasdaq Composite rose 5 points to 16,253.96.
A series of reports showing inflation and the economy have remained hotter than expected have led investors to shift their forecasts for a possible rate cut.
There are several flashpoints this week that could push expectations further higher. In addition to Wednesday's report on inflation felt by U.S. consumers at the checkout, there will also be reports on inflation at the wholesale level and U.S. households' expectations of future inflation.
Fed Chair Jerome Powell recently said he still expects rate cuts this year, but the central bank needs additional confirmation that inflation is moving toward its 2% target. The Fed is keeping its key interest rate at its highest level since 2001, hoping to put enough pressure on the economy and prices that investment will bring inflation under control. The risk of keeping interest rates too high for too long is that it could lead to a recession.
Friday's surprisingly strong jobs report showed that average hourly wages for workers performed as expected, even though employers hired far more workers than expected last month.
But critics say share prices already look expensive given their huge rise of more than 20% from November to March. That means “achieving ambitious earnings forecasts has become paramount,” said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management.
“Economic growth is good, but complacency with its impact is not,” she said.
To that end, this week will mark the start of the latest earnings reporting season. Delta Air Lines, JPMorgan Chase and other banks will headline the early days of the period. Analysts expect companies across the S&P 500 to post their third consecutive quarter of growth.
In the bond market, Treasury yields rose, adding to their year-to-date gains as interest rate cut expectations faded. The yield on the 10-year Treasury note rose to 4.42% from less than 3.90% at the start of the year.
Benchmark U.S. crude rose 10 cents to $86.53 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, rose 17 cents to $90.55 a barrel.
In foreign exchange trading, the euro cost $1.0857, little changed from $1.0856.
Comments are closed.