Asian stocks rise ahead of US CPI data and ECB meeting

SINGAPORE – Industrial metals prices extended their gains on Tuesday on expectations of a global manufacturing rebound, while Asian shares rose slightly more cautiously ahead of this week’s US consumer price index (CPI) data and a crucial European Union meeting. Central Bank (ECB).

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6%. Japan’s Nikkei rose 0.8%. S&P 500 futures and FTSE futures were flat, while European futures fell 0.18%.

In Shanghai, the most traded copper futures rose more than 1% to a record high in May, while zinc and tin hit multi-month highs and aluminum traded just below Monday’s two-year peak.

Even iron ore, hit by China’s real estate crisis, remained above $100 per tonne in Singapore.

“It’s basically a bet on China,” said Vishnu Varathan, head of economics at Mizuho Bank in Singapore.

“It coincided with a trough in global manufacturing, and I think this contributes well to China’s industrial recovery. That aspect of it is a broader story for metals.”

Last week, data showed U.S. manufacturing growing for the first time in a year and a half. Chinese manufacturing activity grew in March for the first time in six months.

On Asian stock markets, Taiwanese shares hit a record high, led by a more than 4% rise in TSMC shares after the world’s largest chipmaker won a $6.6 billion subsidy for a manufacturing plant in Arizona.

Chinese shares were more cautious, with mainland indexes marginally lower and Hong Kong’s Hang Seng up 0.7%, although proxies outside China, from European stock markets to the currencies of the Antipodes, were standout gainers.

The Chinese yuan, which has fallen about 1.8% this year, has found a bottom at about 7.3 per dollar.

Since the beginning of March, the EuroSTOXX index has risen by 2.3% and the German DAX by 3.2%. The Nasdaq was flat and the Nikkei lost 1%.

CPI AND ECB FORWARD
The emphasis this week is mainly on the US inflation figures that will be released on Wednesday and the ECB meeting on Thursday.

Ahead of Wednesday’s data, which is expected to show a slight increase in headline U.S. annual inflation, the shift in interest rate outlooks has pushed yields higher and long bets in the U.S. dollar to levels that look stretched .

Meanwhile, in Asia, the euro was trading firmly at $1.0860 ahead of a policy meeting on Thursday, where investors expect the European Central Bank to announce a cut in June, but they could see some risk of taking a hawkish tone instead catch on.

Meanwhile, the yen remains under heavy pressure as investors see any delays in global interest rate cuts widening the gap with Japan’s near-zero interest rates.

At 151.87 per dollar, the yen is just shy of last month’s 34-year low of 151.975. Against the euro, the yen has been at its weakest in the past three weeks at 164.96. — Reuters