Asian shares were subdued as investors await China trade data to gauge the health of the Chinese economy, while the yen steadied after three days of declines as Japan talked up a potential currency intervention.
Later on Thursday, the Bank of England (BoE) will decide its interest rate policy, with all eyes on the prospects of a June rate cut following the overnight move by Sweden’s Riksbank to cut rates, which underlined Europe’s divergence from the US Federal Reserve.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.1 per cent, hovering not far from a 15-month high hit earlier in the week after Fed Chair Jerome Powell reiterated a stance for policy easing later in 2024.
Investors will be focusing on the US consumer inflation data for April due next Wednesday after three straight prints of upside surprises for a better sense of the direction of the Fed’s policy.
Chinese blue chips rose 0.6 per cent and Hong Kong’s Hang Seng index gained 0.7 per cent thanks to a 2 per cent bounce in technology shares and a recovery in Chinese property developers.
The CSI real estate index rose 0.9 per cent, recouping some of the large losses a day earlier.
Japan’s Nikkei rose 0.3 per cent. Nasdaq stock futures eased 0.1 per cent, dragged lower by Uber, which fell 5.7 per cent overnight as the ride-sharing company issued a downbeat forecast after a surprise quarterly loss.
“A first rate cut by the Riksbank has not been enough to further push the bullish sentiment. Eyes are on the Bank of England,” said analysts at ING in a note to clients.
“Since Powell’s dovish stance just last week, markets will listen carefully for a similar direction as the Fed. This also means that markets may face a surprise if a similar turn towards more dovishness is not reflected in this BoE meeting.”
The Japanese yen steadied at 155.56 per US dollar after falling for three sessions. It rose more than 3 per cent last week after Japanese authorities likely intervened in the market twice to stem its fast declines.
On Thursday, the top currency diplomat Masato Kanda said there is no limit for reserves in currency intervention, keeping traders on edge, while minutes from the Bank of Japan’s April meeting showed policymakers turned overwhelmingly hawkish, helping the yen steady.
However, Japan’s real wages in March fell 2.5 per cent from a year earlier, marking declines for two years, an argument for policymakers to not hike aggressively.
In the Treasuries market, yields were little changed after edging up the day before, with movements likely to be muted ahead of the US inflation report next week. Two-year yields held at 4.8449 per cent, while the 10-year yield was at 4.4963 per cent, having risen 3 basis points overnight.
Oil prices were slightly higher on Thursday, having bounced off two-month lows the previous session. Brent futures rose 0.2 per cent to $US83.76 a barrel, while US crude gained 0.3 per cent to $US79.24 a barrel.
Gold prices were 0.1 per cent higher at $US2,311.23 per ounce.