Asian markets rose on Monday, reversing some of last week’s losses as concerns about the Middle East abated as traders awaited the release of key U.S. inflation data and corporate earnings.
Tensions between the regional rivals have cooled as Iran downplays an Israeli attack on the country that comes days after an Iranian drone and missile attack.
Although the situation remains tense, the lack of deterioration over the weekend gave traders an opportunity to buy stocks, leading to lower oil prices.
The gains came despite a sharp negative lead from Wall Street, where the Nasdaq fell more than 2% due to heavy selling in big tech companies such as Amazon, Apple and Netflix.
Investors are now focused on the Personal Consumption Expenditures (PCE) Index, the Federal Reserve’s preferred measure of inflation, to be released on Friday.
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The figures could play a major role in the central bank’s decision on interest rates, and were announced after the consumer price index exceeded expectations for three consecutive months.
Disappointing CPI data dampened hopes for a June rate cut, while traders scaled back expectations for how much the Fed will cut rates this year.
The PCE report will be followed by the bank’s policy announcement next week, which will look for clues about its next steps.
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Several officials have agreed to temper expectations for cuts, citing stagnant inflation and a still-strong economy and labor market.
Chicago Fed President Austan Goolsby said last week that the fight against soaring prices has stalled.
“At this point it makes sense to wait and get more clarity before taking action,” he said, adding that it will take longer than initially thought to bring inflation back to the central bank’s 2% target. He warned that there was a high possibility.
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This week will also see the interests of big-name companies such as Google’s parent company Alphabet, Tesla, and Microsoft at stake, with investors hoping for positive news coverage to support recent stock gains.
Tokyo – Nikkei Stock Average: up 0.7% to 37,334.97 (break)
Hong Kong Hang Seng Index: up 2.5% to 16,625.93
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Shanghai – Overall: up 0.2% to 3,072.00
Dollar/JPY: 154.68 yen on Friday, rising to 154.64 yen.
EUR/USD: rose from $1.0658 to $1.0667
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GBP/USD: up from $1.2373 to $1.2388
EUR/GBP: up from 86.11p to 86.13p
West Texas Intermediate: down 0.8% to $81.58 per barrel
North Sea Brent crude oil: down 0.8% to $86.62 per barrel
New York – Dow: up 0.6% to 37,986.40 (close)
London – FTSE 100: up 0.2% to 7,895.85 (close)
Dan/MTP
