(Bloomberg) — China-linked stocks were poised for further gains on Tuesday, while other Asian stocks looked gloomy ahead of a slew of global inflation pressures expected to impact monetary policy.
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Stock futures suggest Hong Kong’s benchmark gains more than 1% and Shanghai stocks also rise. Japanese and Australian stock markets are expected to open softer after a start to the week in which the US and British markets were closed and European shares rose in thin trading. US futures traded higher in the early hours of Asia.
Shares of China’s top chip stocks rose on Monday after Beijing announced a major semiconductor investment fund to boost domestic industry, the latest attempt at self-sufficiency at a time when the US is trying to limit its growth. Semiconductor Manufacturing International Corp., China’s largest chipmaker, rose as much as 8.1% in Hong Kong, while Hua Hong Semiconductor Ltd., a smaller rival, rose more than 10%.
Oil advanced for a second day on Tuesday after its biggest weekly loss in four days, highlighted by an OPEC+ supply meeting on Sunday and US demand at the start of the summer season.
Traders will study new inflation data this week from Australia to Japan, the euro region and the US. Bank of Japan Governor Kazuo Ueda and his deputy indicated there is room for a gradual increase in interest rates now that the country has moved away from a 0% inflation target.
The Federal Reserve’s favorite measure of underlying inflation is expected to show modest relief on Friday. Chairman Jerome Powell has emphasized the need for more evidence that inflation is moving toward the 2% target before easing policy. John Williams, Lisa Cook, Neel Kashkari and Lorie Logan are among the US central bankers scheduled to speak this week.
With US and UK markets closed on Monday, European shares were in the spotlight, with carmakers and utilities posting modest gains in the Stoxx Europe 600 index. Sales were less than half of the twenty-day average for that time. U.S. stock futures advanced and a gauge of the dollar fell.
The ECB should not rule out cutting borrowing costs at both its June and July meetings, Governing Council member François Villeroy de Galhau said, pushing back against fellow monetary officials who were uneasy at the idea of successive cuts. Chief economist Philip Lane told the Financial Times that the central bank will have to keep its policy restrictive through 2024, even with the prospect of a rate cut next month.
Although an ECB rate cut was widely reported in June, subsequent steps are less clear given uncertainty about wage growth and factors such as the fighting in the Middle East. Data this week could show that headline inflation in the euro region rose in May.
Read more: On the ‘T+1’ rule that makes US stocks settle down in a day: QuickTake
Trading in cash government bonds was closed. The “T+1” rule, which could potentially cause problems for foreign investors, will come into effect when traders return from the long weekend – causing US stocks to settle in one day instead of two.
Meanwhile, gold gained value while copper futures fell. Oil advanced after the biggest weekly loss in four countries, focusing on an OPEC+ supply meeting on Sunday and US demand at the start of the summer season.
Some important events this week:
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The IMF is holding talks with Ukrainian authorities to review economic policies as the country tries to release the next tranche of $2.2 billion in aid, Monday
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Cleveland Fed President Loretta Mester speaks at BOJ event in Tokyo; Minneapolis Fed President Neel Kashkari and ECB Governing Council member Klaas Knot address the Barclays-CEPR International Monetary Policy forum on Tuesday
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South African elections on Wednesday, the most important since the end of apartheid
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Fed releases the Beige Book economic survey on Wednesday
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South Africa rate decision, US initial unemployment claims, GDP, wholesale stocks, Thursday
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New York Fed President John Williams speaks at the Economic Club of New York on Thursday
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GDP data released for Canada, Eurozone and Turkey, Friday
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Unemployment in Japan, CPI in Tokyo, industrial production, retail sales, Friday
Some of the major moves in the markets:
Shares
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S&P 500 futures rose 0.1% as of 8:24 a.m. Tokyo time
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Nasdaq 100 futures rose 0.2%
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Hang Seng futures rose 1.2%
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CSI 300 futures rose 0.5%
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Nikkei 225 futures rose 0.1%
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S&P/ASX 200 futures were little changed
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0860
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The Japanese yen was little changed at 156.90 per dollar
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The offshore yuan was unchanged at 7.2589 per dollar
Cryptocurrencies
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Bitcoin fell 0.2% to $69,467.46
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Ether fell 0.1% to $3,883.35
Bonds
Raw materials
This story was produced with the help of Bloomberg Automation.
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