Asia stocks brace for US inflation test, China data
Asian share markets made a cautious start on Monday in a week where inflation figures could make or break hopes for earlier U.S. rate cuts, while Chinese activity data will test optimism about a sustained recovery in the world's No. 2 economy.
Beijing has already reported a welcome pickup in inflation to an annual 0.3% in April, helping to soothe worries about a slide into prolonged deflation. Forecasts favour further gains in April retail sales and industrial output due on Friday.
There are also reports Chinese authorities are laying the groundwork for a sale of 1 trillion yuan ($138.39 billion) in longer-dated bonds to help fund stimulus spending at home.
The improved sentiment has helped lift Chinese blue chips to a seven-month high. MSCI's broadest index of Asia-Pacific shares outside Japan was flat, having hit its highest in more than 15 months last week.
Japan's Nikkei eased 0.2%, still saddled with speculation further losses for the yen could lead the Bank of Japan to raise rates in the next few months.
Much now depends on whether the U.S. April inflation report will show a moderation after three months of upside surprises. Median forecasts are for core consumer prices to rise 0.3% in the month, compared to 0.4% in March, pulling the annual rate down to 3.6%.
So crucial are the data that rounding to the second decimal place could make all the difference.
«Our unrounded core CPI forecast at 0.27% m/m suggests larger risks for a dovish surprise to a rounded 0.2% increase,» noted analysts at TD
