Asian Stocks Edge Higher as Traders Brace for Inflation Data
Asian stocks registered gains on Tuesday, while the US dollar hit its lowest level in three months as investors maintain belief in the Federal Reserve's completion of the interest rate hike cycle, focusing on a crucial inflation report later this week.
MSCI's broadest index of Asia-Pacific shares outside Japan rose by 0.39%, establishing nearly a 7% increase in November, marking its strongest monthly performance since January.
Japan's Nikkei slipped by 0.20%, yet achieved an 8% gain for the month, marking its strongest monthly performance in three years.
"The central bank's policy outlook is a significant factor driving improved risk appetite in November," noted Rodrigo Catril, Senior FX Strategist at the National Australia Bank (NABZY).
Evidence of diminishing inflation pressure supports the view that many central banks have concluded their tightening cycles, and expectations of interest rate cuts for next year have been put forth, according to Catril.
The market currently prices in a 96.8% chance that the US central bank will maintain interest rates next month, with the likelihood of rate cuts beginning to rise in mid-2024, according to CME's FedWatch tool.
Investors will focus this week on the Fed's preferred inflation gauge on Thursday and eurozone consumer inflation data to gain clearer insights into the direction of inflation.
European Central Bank President Christine Lagarde stated on Monday that the central bank's battle to curb price growth is not yet over, citing robust wage growth and uncertain prospects even as inflation pressures in the eurozone ease.
Fed Chairman Jerome Powell will also speak on Friday, and his remarks will be carefully scrutinized by traders to assess potential future interest rate directions.
China's blue-chip CSI 300 index fell by 0.23%, while Hong Kong's Hang Seng Index dropped by 0.70%, a day after data showed slower profit growth in Chinese industrial companies in October.
Monday's US data revealed that new home sales for a single-family home declined more than expected in October due to higher mortgage rates, but the housing segment continued to be supported by persistent shortages of available properties in the market.
Weaker-than-expected data weighed on Treasury bond yields, with the 10-year benchmark yield shedding 9.6 basis points on Monday. During Asian hours, they rose by 1.6 basis points to 4.404%.
The US Dollar Index, measuring the greenback against a basket of currencies, declined to 103.11, its lowest since August 31. The Japanese yen gained 0.28% to 148.25 per USD.
Oil prices edged higher on Tuesday after a sharp decline the previous day as investors await the OPEC+ meeting this week and anticipate supply constraints in the coming year.
US crude oil rose by 0.31% to $75.09 per barrel, and Brent returned above $80.00. Gold spot prices increased by 0.1% to $2,015.00 per ounce, slightly below the three-month high touched on Monday.
MSCI's broadest index of Asia-Pacific shares outside Japan rose by 0.39%, establishing nearly a 7% increase in November, marking its strongest monthly performance since January.
Japan's Nikkei slipped by 0.20%, yet achieved an 8% gain for the month, marking its strongest monthly performance in three years.
"The central bank's policy outlook is a significant factor driving improved risk appetite in November," noted Rodrigo Catril, Senior FX Strategist at the National Australia Bank (NABZY).
Evidence of diminishing inflation pressure supports the view that many central banks have concluded their tightening cycles, and expectations of interest rate cuts for next year have been put forth, according to Catril.
The market currently prices in a 96.8% chance that the US central bank will maintain interest rates next month, with the likelihood of rate cuts beginning to rise in mid-2024, according to CME's FedWatch tool.
Investors will focus this week on the Fed's preferred inflation gauge on Thursday and eurozone consumer inflation data to gain clearer insights into the direction of inflation.
European Central Bank President Christine Lagarde stated on Monday that the central bank's battle to curb price growth is not yet over, citing robust wage growth and uncertain prospects even as inflation pressures in the eurozone ease.
Fed Chairman Jerome Powell will also speak on Friday, and his remarks will be carefully scrutinized by traders to assess potential future interest rate directions.
China's blue-chip CSI 300 index fell by 0.23%, while Hong Kong's Hang Seng Index dropped by 0.70%, a day after data showed slower profit growth in Chinese industrial companies in October.
Monday's US data revealed that new home sales for a single-family home declined more than expected in October due to higher mortgage rates, but the housing segment continued to be supported by persistent shortages of available properties in the market.
Weaker-than-expected data weighed on Treasury bond yields, with the 10-year benchmark yield shedding 9.6 basis points on Monday. During Asian hours, they rose by 1.6 basis points to 4.404%.
The US Dollar Index, measuring the greenback against a basket of currencies, declined to 103.11, its lowest since August 31. The Japanese yen gained 0.28% to 148.25 per USD.
Oil prices edged higher on Tuesday after a sharp decline the previous day as investors await the OPEC+ meeting this week and anticipate supply constraints in the coming year.
US crude oil rose by 0.31% to $75.09 per barrel, and Brent returned above $80.00. Gold spot prices increased by 0.1% to $2,015.00 per ounce, slightly below the three-month high touched on Monday.
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