Markets Wrap: Stocks Rise, Dollar Drops Ahead of Inflation Data

Tuesday saw a rise in Asian markets as they headed into their second day of advances. The dollar declined ahead of a range of inflation figures that are anticipated to have an impact on the course of global monetary policy.

Hong Kong equities led increases in the MSCI AC Asia Pacific index. European and American equities futures held steady. For a third day, the Bloomberg dollar index declined compared to all of its Group-of-10 counterparts as investors considered the possibility of a US interest rate decrease. The Australian dollar did better. The yield on the 10-year Treasury was unchanged.

The Australian dollar was strengthened while the US dollar was pushed down by an optimistic risk tone, according to a report from Corpay's APAC currency analyst Peter Dragicevich. "If our estimation of the US core PCE deflator's moderation is correct,

We think the USD may weaken later in the week if the China PMIs improve and/or strange statistical anomalies cause the euro-zone inflation to pick back up speed.”

As larger Chinese cities implement the central government's assistance for the real estate industry, Chinese property shares increased after Shanghai's reduction of down payment percentages and the minimum mortgage threshold. Major Chinese state banks announced that they will spend a total of 114 billion yuan ($15.7 billion) in a semiconductor investment fund, which led to a rise in tech equities in China.

 This week, traders will be examining newly released inflation data from the US, the eurozone, Australia, and Japan. Governors Kazuo Ueda and his deputy of the Bank of Japan have stated that interest rates can be progressively raised now that the country has moved away from a 0% inflation baseline. Producer prices in Japan increased 2.8% from a year ago in April, exceeding forecasts.

According to Capital.Com Inc. senior market analyst Kyle Rodda, "things will pick up tonight when the US opens, and then I suspect the next few days, all else being equal, will be driven by end-of-month flows and then that crucial PCE Index release.""What we are witnessing are the customary tidal currents in the market during periods of low activity and low population."

When it comes in on Friday, the Federal Reserve's preferred gauge of underlying inflation should show some degree of respite. Prior to relaxing policy, Chair Jerome Powell has emphasized the need for more proof that inflation is headed toward the 2% target. US central bankers John Williams, Lisa Cook, Neel Kashkari, and Lorie Logan are scheduled to speak this week.

Gold in commodities stabilized. Oil prices increased as attention turned to US demand at the beginning of the summer driving season and an OPEC+ supply meeting on Sunday. As China intensifies its attempts to stabilize its real estate market and as the currency declined, copper started to rise again. A quick spike to the highest level in wheat in almost nine months was caused by worries over declining inventories.

When it comes in on Friday, the Federal Reserve's preferred gauge of underlying inflation should show some degree of respite. Prior to relaxing policy, Chair Jerome Powell has emphasized the need for more proof that inflation is headed toward the 2% target. US central bankers John Williams, Lisa Cook, Neel Kashkari, and Lorie Logan are scheduled to speak this week.

Gold in commodities stabilized. Oil prices increased as attention turned to US demand at the beginning of the summer driving season and an OPEC+ supply meeting on Sunday. As China intensifies its attempts to stabilize its real estate market and as the currency declined, copper started to rise again. A quick spike to the highest level in wheat in almost nine months was caused by worries over declining inventories. Palm oil is expected to reach its highest closing since late April as major customers' increased demand drives up shipments from leading Southeast Asian farmers.

To counter other monetary authorities that are uneasy about successive reductions, Governing Council member Francois Villeroy de Galhau stated that the ECB shouldn't rule out decreasing borrowing costs at both its June and July meetings. Despite the possibility of an interest rate reduction next month, Chief Economist Philip Lane told the Financial Times that the central bank will need to maintain its stringent policies through 2024.

Although the ECB's rate drop in June was generally anticipated, there is uncertainty about what will happen next due to variables like the violence in the Middle East and wage growth. This week's data could indicate that headline inflation in the euro area increased somewhat in May.

This week's noteworthy occurrences include:

IMF reviews economic strategies with Ukrainian officials as the nation works to release the next $2.2 billion bailout tranche on Monday.

At the BOJ event in Tokyo, Cleveland Fed President Loretta Mester talks; on Tuesday, ECB Governing Council member Klaas Knot and Minneapolis Fed President Neel Kashkari speak at the Barclays-CEPR International Monetary Policy discussion.

Wednesday's election in South Africa is the most important since apartheid ended.

Fed releases economic survey in the Beige Book on Wednesday.

Rate decision in South Africa US first claims for unemployment, GDP, and wholesale inventories on Thursday

Thursday at the Economic Club of New York, New York Fed President John Williams gives a speech.

Friday's GDP data for Turkey, the eurozone, and Canada was released.

Tokyo CPI, industrial production, retail sales, unemployment in Japan, Friday