Asian stocks are buoyed by US futures, oil climbs

A man walks past a screen displaying a graph showing recent average movements in Nikkei stock outside a brokerage in Tokyo, Japan, December 30, 2020. REUTERS/Issei Kato/File Photo

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  • Asian scholarships:
  • Nikkei adds 0.3%, S&P 500 futures rise 0.4%
  • Euro hits 7-year high against yen ahead of ECB meeting
  • US CPI report will test market thinking on Fed hikes
  • Oil companies after Saudi Arabia raises prices

SYDNEY, June 6 (Reuters) – Asian stocks joined U.S. equity futures in making cautious gains on Monday ahead of U.S. inflation data this week, while the euro hit a seven-year high against the yen amid European Central Bank tightening bets.

Oil prices firmed after Saudi Arabia sharply hiked prices for its crude sales in July, an indicator of supply tightness even after OPEC+ agreed to ramp up production increases over the next two months.

MSCI’s broadest index of Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) edged up 0.1%, while Japan’s Nikkei (.N225) recouped its early losses to gain 0.6%.

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S&P 500 futures added 0.5% and Nasdaq futures added 0.6%. EUROSTOXX 50 futures rose 0.8% and FTSE futures rose 1.0%.

chinese blue chips (.CSI300) climbed 1.3% after a survey confirmed activity in the service sector declined in May, but the Caixin index still improved to 41.4 from 36.2. Read more

The sentiment was bolstered by comments from US Commerce Secretary Gina Raimondo that President Joe Biden has instructed his team to consider lifting some tariffs on China. Read more

Markets will be on edge for the US consumer price report on Friday, especially after EU inflation shocked many with a record high last week.

Forecasts call for a sharp rise of 0.7% in May, although the annual rate should remain at 8.3% while core inflation should slow slightly to 5.9%.

A high figure would only add to expectations of aggressive tightening from the Federal Reserve, with markets already pricing in half-point hikes in June and July, and nearly 200 basis points by now. the end of the year.

Some analysts thought Friday’s upbeat payrolls report suggested the Fed was on track for a soft landing.

“May’s numbers are about as good as the Fed could expect,” said Jonathan Millar, economist at Barclays.

“It’s a good sign that the Fed’s plans to cool the labor market are unfolding favorably so far, with solid job gains continuing to generate steady income gains that will help ease related concerns. recession, for now.”

NOT SO NEGATIVE

The European Central Bank meets on Thursday and President Christine Lagarde is considered certain to confirm an end to bond buying this month and a first rate hike in July, although the jury is out on whether it will be 25 or 50 basis points.

The money markets are forecasting increases of 125 basis points by the end of the year and 100 basis points as early as October.

“Recent communications from ECB officials have contemplated 25 basis point hikes in July and September to exit negative rates by the end of the third quarter, although some members prefer to leave the door open for bigger hikes. 50 basis points,” an NAB analyst said. “Lagarde’s post-meeting press conference will be closely watched.”

The prospect of positive rates this year helped the euro climb to $1.0731, away from its recent low of $1.0348, although it struggled to clear resistance around $1.0786.

The euro also hit a seven-year high against the yen at 140.39, after climbing 2.9% last week, while the dollar held steady at 130.65 yen after also gaining 2.0%. 9% last week.

Against a basket of currencies, the dollar settled at 102.110 after strengthening 0.4% last week.

In commodity markets, wheat futures jumped 4% after Russia hit the Ukrainian capital, Kyiv, with missiles, dampening hopes for progress in the peace talks. Read more

Gold was stuck at $1,855 an ounce, after hovering in a tight range for the past two weeks.

Oil prices rose after Saudi Arabia set higher prices for shipments to Asia, as investors bet OPEC’s planned supply increases won’t be enough to meet the asks, especially as China eases its lockdowns.

“Perhaps only a third to a half of what OPEC+ has promised will come online in the next two months,” said CBA mining and energy analyst Vivek Dhar.

“While this increase is badly needed, it falls short of demand growth expectations, especially given the EU’s partial ban on Russian oil imports.

Indeed, Brent is already well past that point, adding 74 cents on Monday to hit $120.46 a barrel. U.S. crude rose another 75 cents to $119.62 a barrel.

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Editing by Sam Holmes and Jacqueline Wong

Our standards: The Thomson Reuters Trust Principles.

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