Asian stocks inched higher on Friday, while the dollar was steady, keeping the pressure on the yen, as investors await inflation readings from Europe and the U.S. that will likely dictate the path of interest rates globally.
A downward revision to consumer spending meant the U.S. economy grew more slowly than expected in the first quarter, data showed on Thursday, weighing on Treasury yields and the dollar.
The revised GDP data also stoked expectations that the Federal Reserve has scope to cut rates this year, with market pricing putting a September cut at a coin toss, CME FedWatch tool showed. For the year, traders are pricing in 35 basis points of easing.
Financial markets have been biding their time for the main data event of the week – Friday’s April report on U.S. core personal consumption expenditures (PCE) price index, which is the Fed’s preferred inflation gauge. Inflation report from the euro zone is also due on Friday.
Ben Bennett, Asia-Pacific investment strategist at Legal And General Investment Management, said the PCE reading should not provide much of a surprise.
“But investors will still be very sensitive to even small misses,” he said.
The shifting expectations over interest rates has kept the markets on edge, with European stock markets set for a subdued open. Eurostoxx 50 futures was down 0.04% and FTSE futures was flat.
MSCI’s broadest index of Asia-Pacific shares outside Japan, opens new tab rose 0.20%, pushing away from the three-week low hit on Thursday. Analysts said month-end rebalancing by fund managers helped lift equities in the region.
The index was set for a gain of 2.7% in May, rising for the fourth straight month.
China stocks also rose, with the blue-chip index up 0.20% while Hong Kong’s Hang Seng index gaining 1%.
SOURCE: REUTERS
