Most markets rose Friday after falling for much of the week, with below-forecast US data injecting some fresh life into hopes the Federal Reserve will cut interest rates this year.
The readings came ahead of the release of the central bank’s favoured gauge of inflation later in the day, which could provide more of an idea about the outlook for monetary policy.
Bets on how many reductions, if any, will be announced this year have been whittled down since January owing to a string of outsized data and warnings from decision-makers that they want to see strong evidence prices are under control before moving.
Most have called for rates to be kept elevated for some time, while some have even advocated for another hike.
Investors in Asia, who have struggled to revive a recent rally, were given a much-needed lift by US data Thursday showing the economy grew less than expected in the first quarter, personal consumption missed forecasts and jobless claims topped estimates.
The figures helped push Treasury yields down after they hit a four-week high.
But all focus is now on the personal consumption expenditures (PCE) index, which the Fed puts the most faith in when considering its plans for rates.
The report comes after data showed consumer prices eased last month — ending a run of three successive above-forecast prints — and the jobs market softened.
“Assuming the PCE comes in OK, the data suggests the Fed doesn’t need to hike and may cut later in the year,” Capital.com’s Kyle Rodda said.
Friday also sees the release of the latest eurozone consumer price index, a key data point ahead of the European Central Bank’s monetary policy meeting on June 6, when it is tipped to reduce rates.
A weak showing among most tech giants weighed on Wall Street, though investors in most Asian markets went their own way after a week of selling.
Tokyo, Sydney, Seoul, Singapore, Mumbai, Wellington and Manila but Hong Kong, Shanghai, Taipei, Bangkok and Jakarta fell.
London rose but and Frankfurt and Paris dipped.
There was little reaction to data showing China’s factory activity contracted in May for the first time in three months, denting fragile optimism about the recovery in the economy.
Still, Mark Mobius, the co-founder of Mobius Capital Partners, said he had turned bullish on the outlook for Chinese equities in recent weeks after authorities unveiled a range of measures aimed at supporting the country’s troubled property market.
Tokyo – Nikkei 225: UP 0.2 percent at 38,119.96 (close)
Hong Kong – Hang Seng Index: DOWN 0.8 percent at 18,079.61 (close)
Shanghai – Composite: DOWN 0.2 percent at 3,086.81 (close)
London – FTSE 100: UP 0.1 percent at 8,241.25
Dollar/yen: UP at 157.00 from 156.82 yen on Thursday
Pound/dollar: DOWN at $1.2706 from $1.2733
Euro/dollar: DOWN at $1.0823 from $1.0834
Euro/pound: UP at 85.18 from 85.07 pence
West Texas Intermediate: DOWN 0.2 at $77.72 per barrel
Brent North Sea Crude: DOWN 0.1 percent at $81.81 per barrel
New York – Dow: DOWN 0.9 percent at 38,111.48 (close)
