Asia shares pause ahead of inflation tests

Asian shares paused near seven-month highs on Monday as investors eagerly awaited inflation data from the United States, Japan, and Europe, Reuters reported. This data will provide insight into future rate movements.

The core personal consumption expenditures price index, a key measure for the Federal Reserve, is due on Thursday. Forecasts suggest a 0.4 per cent increase, higher than the previously expected 0.2 per cent increase, potentially reaching as high as 0.5 per cent.

MSCI’s broadest index of Asia-Pacific shares outside Japan dipped on Monday 0.3 per cent, having climbed 1.7 per cent last week to seven-month highs.

Japan’s Nikkei rose 0.3 per cent, having climbed 1.6 per cent last week to clear its previous record high as bulls look to test the 40,000 barriers.

S&P 500 futures and Nasdaq futures were both trading 0.2 per cent lower. EUROSTOXX 50 futures and FTSE futures both eased 0.2 per cent.

Japanese consumer prices data is expected to be released on Tuesday, with forecasts indicating a slowdown in core inflation to 1.8 per cent in January, the lowest since March 2022.

A weaker result could strengthen the argument against tightening from the Bank of Japan (BOJ), although policymakers appear to be relying on increasing wages to justify ending negative rates in March or April.

Inflation figures for the European Union are scheduled for release on Friday, with the core expected to slow to 2.9 per cent, the lowest since early 2022, potentially leading to a policy easing by the European Central Bank (ECB).