(Bloomberg) — Stocks in Asia were mixed following cautious trading on Wall Street as traders await US inflation data that’s set to influence the timing of the Federal Reserve’s pivot to monetary easing.
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Japanese shares fell at the open after the benchmark Topix slid more than 2% on Monday amid growing speculation the central bank will tweak its policy in a meeting next week. Australian equities rose, while futures pointed to gains in Hong Kong.
The yen strengthened for a sixth day, its longest winning streak since July, following a media report saying the Bank of Japan will end negative interest rates if wage data comes out strong. Producer price data released early Tuesday beat estimates.
US stock futures advanced after both the S&P 500 and the Nasdaq 100 closed marginally lower on Monday. Investors are awaiting more clues on whether the recent uptick in US consumer prices was just a blip or an indication the disinflationary trend has hit a roadblock. After closing at record highs 16 times this year, the S&P 500 is showing signs of overheating, spurring warnings about a near-term consolidation.
US consumer expectations for inflation over the next three years climbed in February, according to a New York Fed survey. Those figures came ahead of data Tuesday that’s forecast to show inflation abated only gradually last month — illustrating why US officials are in no rush to cut interest rates.
Treasuries were little changed after falling on Monday, with traders bracing for another flurry of high-grade corporate debt sales. The dollar weakened against all its Group-of-10 peers, with the yen leading gains.
While the S&P 500 has fallen on just four CPI reporting days in the past 12 months, volatility is picking up in those sessions. Over the past six months, the equity gauge has moved about 0.8% in either direction on the day CPI has been released, according to data compiled by Bloomberg. That’s up from less than 0.5% in September.
Investors are likely already incorporating a lot of good news into stock prices and moving ahead of incoming data that supports the soft-landing narrative, according to Anthony Saglimbene at Ameriprise.
“Stocks are likely overdue for some consolidation or even an extended period of modest declines at some point in the year,” he said. “Without a meaningful shift in the fundamental picture, we suspect investors would welcome such a downdraft and treat the event as a buying opportunity.”
JPMorgan Chase & Co. was the latest to flag that valuations of the seven tech giants that have led the record-breaking rally on Wall Street are currently lower relative to the rest of the S&P 500 than the average of the past five years.
“There is a concern over the very strong outperformance of the Magnificent 7, but we note that the group is currently trading less stretched than a few years ago, given earnings delivery,” strategist Mislav Matejka wrote in a note.
Oil ticked higher following a three-day drop ahead of a series of market reports and US inflation data. Bitcoin topped $72,000 for the first time, advancing for a sixth day on the back of inflows into US exchange-traded funds.
Key events this week:
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UK Financial Policy Committee quarterly meeting, attended by Bank of England Governor Andrew Bailey, Tuesday
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EU finance ministers meet in Brussels, Tuesday
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ECB Governing Council Member Robert Holzmann, Tuesday
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US CPI, Tuesday
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Eurozone industrial production, Wednesday
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ECB Governing Council member Yannis Stournaras speaks, Wednesday
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Volkswagen, Adidas earnings, Wednesday
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US PPI, retail sales, initial jobless claims, business inventories, Thursday
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China property prices, Friday
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Japan’s largest union federation announces results of annual wage negotiations, just ahead of Bank of Japan policy meeting, Friday
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Bank of England issues inflation survey, Friday
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US industrial production, University of Michigan consumer sentiment, Empire Manufacturing, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures rose 0.2% as of 9:03 a.m. Tokyo time. The S&P 500 fell 0.1%
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Nasdaq 100 futures rose 0.4%. The Nasdaq 100 fell 0.4%
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Japan’s Topix index fell 1.4%
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Australia’s S&P/ASX 200 Index rose 0.2%
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Hong Kong’s Hang Seng futures rose 0.5%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0932
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The Japanese yen rose 0.2% to 146.67 per dollar
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The offshore yuan was little changed at 7.1779 per dollar
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The Australian dollar was little changed at $0.6615
Cryptocurrencies
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Bitcoin rose 0.2% to $72,270.38
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Ether rose 0.9% to $4,071.11
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rita Nazareth.
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