A man walks past a screen showing a graph showing recent average movements in Nikkei shares outside a brokerage house in Tokyo, Japan, December 30, 2020. REUTERS / Issei Kato / File
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- Asian stock markets:
- Nikkei adds 0.3%, S&P 500 futures rise 0.4%
- The euro fell a 7-year high against the yen ahead of the ECB meeting
- A report on the US CPI to test market thinking about Fed increases
- Oil companies after Saudi Arabia raised prices
SYDNEY, June 6 (Reuters) – Asian stocks joined US stock futures in cautious gains on Monday ahead of inflation this week as the euro hit a seven-year high against the yen amid European Central Bank tightening bets.
Oil prices hardened after Saudi Arabia sharply raised crude oil sales in July, an indicator of how limited supply is even after OPEC + agreed to accelerate production growth over the next two months.
MSCI’s broadest Asia-Pacific stock index outside Japan (.MIAPJ0000PUS) rose 0.1%, while Japan’s Nikkei (.N225) recovered early losses to gain 0.6%.
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S&P 500 futures added 0.5% and Nasdaq futures added 0.6%. EUROSTOXX 50 futures rose 0.8% and FTSE futures rose 1.0%.
China’s blue chips (.CSI300) rose 1.3 percent after a survey confirmed that activity in the services sector contracted in May, but the Caixin index still improved to 41.4 from 36.2. Read more
The sentiment was fueled by comments from US Commerce Secretary Gina Raimondo that President Joe Biden had asked his team to consider removing some tariffs on China. Read more
Markets will be strained for the US Consumer Price Report on Friday, especially after EU inflation shocked many with a record high last week.
The forecast is for a sharp rise of 0.7% in May, although the annual rate remained at 8.3%, while core inflation slowed slightly to 5.9%.
A large number would only add to the Federal Reserve’s aggressive tightening expectations with markets already rising by half a point in June and July and nearly 200 basis points by the end of the year.
Some analysts believe Friday’s optimistic payroll report suggests the Fed is on the verge of a soft landing.
“The figures for May turned out to be as good as the Fed could have expected,” said Jonathan Millar, an economist at Barclays.
“It is a good sign that the Fed’s plans to cool the labor market are currently being implemented favorably, with solid employment gains continuing to generate stable income gains that will help alleviate recessionary concerns for the time being.
NOT SO NEGATIVE
The European Central Bank is meeting on Thursday, and President Christine Lagarde is sure to confirm the cessation of bond buying this month and the first increase in interest rates in July, although it is unclear whether it will be 25 or 50 basis points.
Money markets are estimated at 125 basis points by the end of the year and 100 basis points after October.
“The latest announcements by ECB staff looked at an increase of 25 basis points in July and September to break negative interest rates by the end of the third quarter, although some members prefer to leave the door for larger increases of 50 basis points. points open, “said the NAB analyst. “Lagarde’s post-meeting press conference will be closely monitored.”
The prospect of interest rates becoming positive this year has helped the euro rise to $ 1.0731, somewhat from its recent low of $ 1.0348, although it is struggling to clear resistance around $ 1.0786.
The euro also hit a seven-year high of 140.39 yen after rising 2.9% last week, while the dollar remained at 130.65 yen after also rising 2.9% last week.
Against a basket of currencies, the dollar reached 102,110 after gaining 0.4% last week.
In commodity markets, wheat futures jumped 4% after Russia hit Ukraine’s capital Kyiv with missiles, shattering hopes for progress in peace talks. Read more
Gold remained at $ 1,855 an ounce, keeping it in a narrow range over the past few weeks.
Oil prices rose further after Saudi Arabia set higher supply prices for Asia, while investors pledged that OPEC’s planned supply increases would not be enough to meet demand, especially as China eases blockages. you are.
“Maybe only a third to half of what OPEC + promised will go online in the next two months,” said Vivek Dhar, a CBA mining and energy analyst.
“Although this increase is urgently needed, it does not meet expectations for growth in demand, especially given the EU’s partial ban on Russian oil imports. We see risks of raising our short-term forecast for the price of Brent oil by $ 110 / barrel.
In fact, Brent is already well above the added 74 cents on Monday to reach $ 120.46 a barrel. US crude rose another 75 cents to $ 119.62 a barrel.
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Edited by Sam Holmes and Jacqueline Wong
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