Asian stock markets opened cautiously on Monday when investors prepared for this week's central bank conferences in Europe, Japan, and the US. The US inflation statistics will probably affect the Federal Reserve's course for monetary policy.
After reaching a more than one-month high of 521.94 earlier in the session, MSCI's broadest index of shares in the Asia - Pacific region outside of Japan fell 0.17% to 519.96. For the month, the index has risen 4%. Japanese stock index Nikkei gained 0.7%, while S&P 500 E-mini futures gained 0.15%.
The Hang Seng Index in Hong Kong began 0.3% higher while China stocks declined 0.01%. Stocks have suffered as a result of China's stuttering post - COVID-19 economic turnaround, with investors placing their faith in additional policy stimulus as sluggish manufacturing and exports harm the year's overall outlook.
The Reserve Bank of Australia and the Bank of Canada shocked the markets this week by raising interest rates to combat persistent and sticky inflation, igniting concerns that the Fed would do the same and adopt a hawkish approach in its June meeting.
The Fed may have to learn the same lesson that other central banks, like the Bank of Canada, have: more tightening is still required to get inflation to 2%, according to Citi strategists.
When it comes on June 13 to 14, the US central bank is expected to keep interest rates unchanged by 71%, based on market expectations, according to the CME FedWatch tool.
It will depend on Tuesday's CPI whether there will be a 25 basis point increase or a "skip," according to a note from Citi.
Citi anticipates that the Fed will increase interest rates by 25 basis points. The simplest course of action is to increase rates once it is acknowledged that they should be higher.
Investors are still unsure of the Fed's course of action this week, but they are more confident that the European Central Bank, that meets on Thursday, is going to increase interest rates and maintain its aggressive stance.
According to Mohit Kumar, an economist of Europe at Jefferies, they anticipate ECB President Lagarde to maintain hawkish approach on inflation, saying that more has to be carried out on the inflation front.
According to Kumar, who anticipates the ECB to raise interest rates by 25 basis points, Lagarde is unlikely to signal that they are prepared to halt after July as the market currently anticipates.
The dollar index, which compares the value of the dollar to those of six major competitors, increased on the currency market, while the euro's value decreased by 0.04% to $1.0743. The price of sterling was $1.2575, up 0.05% from the prior day.
In anticipation of the Bank of Japan's policy meeting on Friday, the yen declined 0.01% to 139.39 per dollar.
According to sources, the the Bank of Japan is anticipated to keep its ultra-loose monetary policy in place and forecast for a modest economic recovery this week as strong business and household spending offset the negative effects of slowing global demand.
Another record low was reached by the Turkish lira, which fell to 23.77 to the dollar.
US oil prices fell by 0.34% to $69.93 a barrel, while Brent was trading at $74.49, down 0.4% from the previous day. Last week, both benchmarks saw their second consecutive weekly decrease as unfavorable economic statistics from the world's top crude importer, China, sparked worries about the expansion of demand.
To $1,958.69 per ounce, spot gold decreased 0.1%. US gold futures decreased 0.15 percent to $1,959.30 per ounce.