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Distracted markets play the waiting game ahead of US data reveal
Tokyo stocks ended higher, while there were also gains in Seoul, Bangkok and Jakarta.

Share prices stayed mostly level and the dollar remained in a holding position as traders waited for May inflation figures from the Federal Reserve

 

Asia’s share markets didn’t move far as traders kept an eye out for US inflation data waiting for any sign the Federal Reserve could start downsizing its fiscal stimulus.

Hong Kong stocks finished marginally lower on Thursday as investors struggled to maintain early gains while Tokyo’s benchmark Nikkei index recovered early losses and closed higher on tech rallies, with sentiment sustained by the acceleration of Japan’s vaccination drive.

Risk assets have remained buoyant in recent weeks as central bankers on both sides of the Atlantic signalled their willingness to keep the monetary taps on until the post-pandemic recovery takes hold, believing inflationary pressures to be short-lived. 

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Yet April’s surprisingly strong US inflation print spooked some, leading to a cautious run into the May numbers later on Thursday in case of another upside surprise. 

Lagging in the pace of its recovery from Covid-19, the European Union’s central bank is set to keep rates unchanged when it meets later in the session, despite the most recent inflation print passing the target of just under 2%.

Ahead of both key events, market sentiment remained subdued with MSCI’s broadest gauge of global stocks flat at 715.79 points, just off a record high of 718.19 hit last week.

MIXED OPENING

US stock futures pointed to a mixed open on Wall Street, with the S&P called flat and Nasdaq down 0.2%.

The Hang Seng Index was flat, inching down 3.75 points to 28,738.88.

The benchmark Shanghai Composite Index rose 0.54 percent, or 19.46 points, to 3,610.86 while the Shenzhen Composite Index on China’s second exchange added 1.09 percent, or 26.04 points, to 2,422.58.

The Nikkei 225 index rose 0.34 percent, or 97.76 points, to 28,958.56, but the broader Topix index edged down 0.02 percent, or 0.41 points, to 1,956.73.

SHORT POSITIONS

Fixed income markets were the big movers, with some analysts pointing to a setback to more US stimulus efforts, while others suggested a likely clearing out of short positions in US government bonds ahead of the May CPI.

Short positions in Treasuries were the highest since 2018, according to JP Morgan positioning data last week. 

The yield on benchmark 10-year U.S. Treasury notes  edged higher and was last at 1.4992%, albeit some way off the June high of 1.6270%. 

Activity was muted in the currency market with the dollar flat against a basket of major currencies.

 

MARKETS

Tokyo – Nikkei 225: UP 0.3 per cent at 28,958.56 (close)

Hong Kong – Hang Seng Index: FLAT at 28,738.88 (close)

Shanghai – Composite: UP 0.5 per cent at 6,610.86 (close)

New York – Dow: DOWN 0.4 per cent at 34,447.14 (close)

 

  • Reporting by Reuters & AFP

 

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Sean OMeara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.

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