Asian shares wobble as investors wary before US inflation data

SINGAPORE / WAM

Asian stocks stuttered in choppy trade on Wednesday as markets braced for a key US inflation reading, Reuters reported. Meanwhile, the yen lurked just shy of 160 per dollar level, keeping traders on alert for another round of intervention by Japanese authorities.
Risk sentiment was also capped as hawkish comments from Federal Reserve officials kept near-term US rate cut expectations in check in a boost to the dollar. A jump in Australian consumer inflation to a six-month high in May lifted the Australian dollar to its highest in two weeks.
Asia-Pacific, European markets
MSCI’s broadest index of Asia-Pacific shares outside Japan struggled for direction and was flat at 566.53, not far from the two-year high of 573.38 it hit last week. Japan’s Nikkei and Taiwan stocks rose, led by chipmakers, tracking the rally in tech heavy Nasdaq on June 25, with Nvidia surging over 6 percent, snapping out of a three-session tailspin that had erased about $430 billion from its market value. Eurostoxx 50 futures up 0.4 percent and German DAX futures 0.3 percent higher. FTSE futures were 0.2 percent higher.
US policy, PCE
On the US monetary policy front, Fed officials urged patience on interest rate cuts, with governor Lisa Cook saying the central bank is on track for a rate cut if the economy’s performance meets her expectations. But Cook declined to say when the Fed will be able to act. US Federal Reserve Governor Michelle Bowman reiterated her view that holding the policy rate steady “for some time” will probably be enough to bring inflation under control.
The comments along with data showing a stable housing market kept expectations in check over when and by how much the Fed will cut rates.
Traders are eagerly awaiting Friday’s release of the US personal consumption expenditures (PCE) price index — the Fed’s preferred measure of inflation, with economists polled by Reuters expecting the annual growth to ease to 2.6 percent in May.
Forex
In the currency market, the Aussie rose more than 0.5 percent to $0.6685 after hotter-than-expected inflation data, leading markets to narrow the odds on another rate hike as early as in August.
The dollar index, which measures the US unit against six peers, was steady at 105.66, while the euro was at $1.071075. The yen was fetching 159.76 per dollar and has been trading in tight ranges as it stalks the crucial 160 level that some traders say might bring about another round of intervention. The yen touched a 34-year low of 160.245 per dollar on April 29, prompting Tokyo to spend roughly 9.8 trillion yen in late April and early May to support the currency.
The latest slide in the yen has come in the wake of the Bank of Japan’s (BOJ) decision this month to hold off on reducing bond-buying stimulus until its July meeting. The BOJ though is dropping signals that its quantitative tightening plan in July could be bigger than markets think, and may even be accompanied by an interest rate hike.
Commodities
In commodities, oil prices rose, with Brent futures 0.45 percent higher at $85.39 a barrel, while US West Texas Intermediate futures were up 0.53 percent at $81.26 per barrel. Gold prices eased to $2,316.88 per ounce, but remain up 12 percent this year after having touched a record high of $2,449.89 last month.