Asian stocks open higher, await inflation clues

Asian stocks opened cautiously higher on Monday, as investors awaited key economic data and corporate earnings that could provide clues about future interest rate moves.

The dollar and bond yields were on the decline, reflecting growing expectations for rate cuts in both the United States and Europe.

Oil prices rose by 0.8 per cent following a recent escalation of tensions between Israel and Hezbollah. The conflict raised concerns about potential disruptions to global oil supplies if it were to intensify.

Brent crude futures increased by 55 cents to $79.57 a barrel, while US crude added 56 cents to $75.39 per barrel.

Investors are also eagerly anticipating earnings results from AI powerhouse Nvidia, which are due out on Wednesday.

The company’s stock has surged by 150 per cent year-to-date, contributing significantly to the S&P 500’s 17 per cent gain over the same period.

In the United States, S&P 500 and Nasdaq futures were trading near flat, while in Europe, the EUROSTOXX 50 futures dipped by 0.2 per cent. Japan’s Nikkei index fell by 1.0 per cent, as a stronger yen weighed on export-oriented stocks.

MSCI’s Asia-Pacific shares index outside Japan rose by 0.8 per cent, following a 1.1 per cent increase last week. South Korea’s index remained stable, while Chinese blue chips were relatively unchanged.

The yen has appreciated against the dollar following comments from Federal Reserve Chair Jerome Powell, who indicated that the central bank is considering easing monetary policy to mitigate risks to the labor market.

Both the United States and the European Union are expected to release inflation data later this week. If the figures come in below expectations, it could pave the way for rate cuts in September.

The market is currently pricing in a quarter-point rate cut at the Fed’s September meeting, with a 38 per cent chance of a larger 50-basis-point reduction.

In addition to the inflation data, investors are also monitoring developments in the US job market. If the August employment report is weaker than expected, it could increase the likelihood of a more aggressive rate cut by the Fed.

The dollar fell by 0.5 per cent to 143.64 yen, following a 1.3 per cent drop on Friday. The euro rose to $1.1191, near a 13-month high, while the Swiss franc remained strong at 0.8461 per dollar.

Gold held steady at $2,514 an ounce, close to its all-time high of $2,531.60, supported by a weaker dollar and lower bond yields.

Attribution: Reuters

Subediting: M. S. Salama