Stocks rise, dollar falls on hope of central banks easing: Markets shrink

(Bloomberg) — Asian shares gained as the dollar eased amid bets that the Federal Reserve will cut interest rates this year and that U.S. inflation data this week will ease price pressures.

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Stock markets in Hong Kong, China, Australia, South Korea and Japan rose on Monday, while US stock futures were little changed. The Australian dollar, euro and yen strengthened against the greenback as Bank of Japan Deputy Governor Shinichi Uchida said the end of the battle with deflation was in sight.

Global investors are hopeful that the central bank, along with the European Central Bank and its peers, will cut interest rates this year. This, coupled with strong corporate earnings and signals from US officials that further rate hikes are unlikely, has boosted investor sentiment.

Economists now expect fewer Fed cuts than they did previously, “Markets have said — no matter — we’ve had strong profit numbers,” Shane Oliver of AMP Capital Markets Ltd. said in an interview with Bloomberg Television. “It kept the markets going.”

Inflation prints from Australia to Japan, the euro zone and the US are due this week as traders place bets on the outlook for monetary policy.

The ECB is widely expected to cut rates for the first time since ending an unprecedented tightening campaign at its June meeting. But U.S. officials are moving toward a center at a slower pace, with Fed Chairman Jerome Powell insisting that more evidence is needed that inflation is on a sustainable path toward their 2% target before lowering the policy benchmark.

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However, Wall Street got a measure of relief last week when University of Michigan figures showed consumer prices were expected to rise faster than previously reported.

“Risk sentiment is upbeat after softer inflation expectations,” Saxo Capital Markets’ Charu Sanana said thanks to the US data.

The Federal Reserve’s first line inflation measure – due on Friday – is set to show some relief from stubborn price pressures. John Williams, Lisa Cook, Neel Kashkari and Lori Logan are scheduled to speak on U.S. central bankers.

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Trading in money treasuries was closed. British and American markets are closed on Monday for the holiday. That means when traders return from the long weekend, the potentially troublesome “T+1” rule for foreign investors will come into effect — settling U.S. stocks in one day instead of two.

Among commodities, oil and gold rose. Commodity prices have continued to rise this year due to supply constraints, rising demand and some speculative activity. The Organization of the Petroleum Exporting Countries and its allies are set to discuss supply cuts online on June 2.

Some of the key events this week:

  • The ECB’s Philip Lane speaks in Dublin on Monday about inflation

  • The IMF is holding discussions with Ukrainian officials to review economic policies as the country seeks to unlock $2.2 billion in aid on Monday.

  • Cleveland Fed President Loretta Mester Speaks at BOJ Event in Tokyo; Minneapolis Fed President Neel Kashkari and ECB Governing Council member Klaus Knott address the Barclays-CEPR International Monetary Policy Forum on Tuesday.

  • South Africa’s election on Wednesday is the most important since the end of apartheid

  • The Fed releases the Page Book economic survey on Wednesday

  • South Africa Rate Decision, US Initial Jobless Claims, Gross Domestic Product, Wholesale Inventories, Thursday

  • New York Fed President John Williams speaks at the Economic Club of New York on Thursday

  • Canada, Eurozone, Turkey GDP data released on Friday

  • Japan Unemployment, Tokyo CPI, Industrial Production, Retail Sales, Friday

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Some key movements in the markets:

Shares

  • S&P 500 futures were little changed as of 12:22 pm Tokyo time

  • Nikkei 225 futures (OSE) rose 0.3%

  • Japan’s TOPICS rose 0.3%

  • Australia’s S&P/ASX 200 rose 0.7%

  • Hong Kong’s Hang Seng rose 0.4%

  • The Shanghai composite rose 0.3%

  • Euro stocks 50 futures fell 0.1%

Coins

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.0850

  • The Japanese yen rose 0.1% to 156.76 per dollar

  • The offshore yuan was little changed at 7.2572 per dollar

Cryptocurrencies

  • Bitcoin rose 0.5% to $69,016.01

  • Ether rose 1.7% to $3,924.89

Bonds

materials

  • West Texas Intermediate crude was up 0.3% at $77.97 a barrel.

  • Spot gold rose 0.5% to $2,344.94 an ounce

This story was produced with the help of Bloomberg Automation.

–With assistance from Matthew Burgess.

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