© Reuters. FILE PHOTO: A passer-by wearing a protective mask stands in front of a screen of blank prices on a stock quote board after the Tokyo Stock Exchange temporarily suspended all trading due to system glitches, amid the disease coronavirus (COVID-19) pa
By Swati Pandey
SYDNEY (Reuters) – Asian stocks rose slightly, but maintained their recent trading range on Thursday, as investors focused on U.S. inflation data and the risk of an upside surprise that could prompt the Federal Reserve to start cutting back its massive stimulus measures.
In early European trading, the pan-region added 0.52% and German rose 0.1%, as did London futures. US equity futures, the, rose 0.32%.
The largest MSCI Asia-Pacific stock index outside of Japan gained 703.7 points, but remained in the 698-712 point range it has traded in since late May.
rose 0.3% while the Australian benchmark ended up 0.6%. Chinese stocks gained with blue chip index rising 0.6%
Overnight, fixed income markets were the big drivers, with some analysts signaling a pullback in US stimulus efforts, while others suggested a likely erasure of short positions in US government bonds before the May CPI.
Short positions in Treasuries were the highest since 2018, according to positioning data from JP Morgan last week.
The benchmark’s return slipped to 1.4891% from 1.528% on Tuesday night. A fall below 1.47% would take yields to their lowest since March 4.
Some also believed that hedge funds may have shifted their bond allocation, due to lower volatility in the bond market recently, analysts said.
On Wall Street overnight, the index approached its all-time high set in May as major tech rallied along with healthcare stocks, but ended down 0.1%. The Dow Jones slipped 0.44% and fell 0.09%. ()
Markets look to the European Central Bank (ECB) policy meeting later today, where it will likely keep its policy stance unchanged and release updated macroeconomic projections for the euro area.
Also later in the world day, expectations are that the data will show that the US CPI accelerated 0.4% in May, bringing the annual pace to 3.4%, according to a Reuters poll.
“A big surprise on the rise in inflation could tip the discussion over to the Fed’s tapering sooner rather than later, although the majority would still seek substantial progress towards maximum employment before considering tapering,” wrote ANZ economists in a note.
So far however, “the market is adhering to the Fed’s view that the price hike is transient and the Fed will not change its policy stance at next week’s FOMC meeting,” they added. .
Analysts said the data would be critical for gold as a higher print and subsequent downside fears could reduce the luster of the yellow metal.
The United States lost 0.3% to $ 1,889.50 an ounce.
Oil prices fell as inventory data in the United States, the world’s largest consumer of oil, showed an increase in gasoline inventories indicating lower than expected fuel demand in early summer, the country’s high automobile season.
Futures fell 51 cents to 71.71 per barrel, while futures fell 46 cents to $ 69.50 per barrel.
Activity was muted in the currency market, with the dollar remaining stable against the yen at 109.55.
The euro was a bit weaker at $ 1.2162 ahead of the ECB meeting while the pound eased to $ 1.4105. The dollar and the New Zealand dollar barely changed.
This left the slightly firmer at 90.197.