Asian markets reached a 15-month high on Monday amidst cautious anticipation of U.S. inflation data that could influence expectations for earlier interest rate adjustments. Simultaneously, investors await Chinese economic indicators to gauge the sustainability of the country’s recovery.
Beijing’s recent report of a modest uptick in inflation to 0.3% annually in April alleviated concerns of prolonged deflation, with forecasts favoring further improvements in retail sales and industrial output. Chinese authorities plan to issue 1 trillion yuan ($138.24 billion) in longer-term bonds to support domestic stimulus initiatives.
The positive sentiment buoyed Chinese blue-chip stocks to a seven-month high, despite a slight softening on Monday due to reports of impending U.S. tariffs on Chinese goods.
MSCI’s broadest index of Asia-Pacific shares outside Japan inched up 0.1% after rallying for three consecutive weeks. Meanwhile, Japan’s Nikkei slipped 0.3%, reflecting concerns that further depreciation of the yen could prompt the Bank of Japan to consider rate hikes.
Globally, market sentiment hinges on the U.S. April inflation report, which may indicate a moderation after three months of unexpected increases. The outcome could significantly impact expectations regarding Federal Reserve policy adjustments.
US earnings reports, particularly from tech giant Nvidia (NASDAQ:NVDA) on May 22, are poised to bolster investor sentiment. Strong corporate earnings have contributed to record-high global share indices in recent weeks.
Despite fluctuations, the U.S. economy’s robust performance continues to support the dollar, with the threat of Japanese intervention preventing significant yen appreciation. Gold and oil prices experienced marginal fluctuations amid evolving market dynamics and demand patterns.
Investor attention remains focused on forthcoming economic data releases and central bank communications, which are likely to shape market expectations in the near term.