Japan stocks rise; US futures fall ahead of CPI: Market falls

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(Bloomberg) — Japanese stocks were poised to rise as the country’s markets resumed trading after the holiday. US equity futures fell ahead of inflation data due on Tuesday.

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Australian shares were steady in early trading after the S&P 500 finished little changed on Monday. Japanese futures were up 1.6%, helped by a weaker yen, while markets in China, Hong Kong, Taiwan and Vietnam are closed for the Lunar New Year holidays.

The yen was little changed on Monday and traded around 149 per dollar, down from less than 140 at the start of the year. The recent softening reflects comments from Bank of Japan officials that the central bank would be in no rush to exit supportive policy.

SoftBank Group Corp., one of Japan’s largest listed companies, will be in focus after more profits for Arm Holdings Plc, in which it owns a stake. Arm shares rose 29.2% in New York trading on Monday and have nearly tripled since their listing in September.

Strong demand for chips, expected to be a boon for makers of a coming boom in artificial intelligence, helped Nvidia Corp rise on Monday – and briefly overtake Amazon.com Inc’s market value.

Treasuries were largely unchanged on Monday and the 10-year yield rose less than one basis point. Australian and New Zealand yields were also little changed in early Asian trading.

The dollar index remained steady, reflecting calm in Treasury markets ahead of the January US Consumer Price Index report due on Tuesday. The report is expected to show the first reading for year-on-year headline inflation below 3% since March 2021, supporting the deflation narrative that has helped propel equities in recent months.

“It’s important not to lose sight of the bigger picture, which is that persistent deflation should the central bank start tapering this year,” said Mark Haefele of UBS Global Wealth Management.

Federal Reserve Bank of Richmond President Thomas Barkin said a major risk of inflation slipping back toward the central bank’s target comes from U.S. businesses. Many have increased profit margins in recent years by raising prices – a practice that may be difficult to modify and which will provide upward pressure to inflation.

In Asia, data scheduled for release include Japan’s producer prices and New Zealand’s inflation expectations. Australia’s consumer confidence reached a 20-month high in February, a report on Tuesday showed.

Geopolitics remained in focus. The European Union proposed trade sanctions on nearly two dozen companies, including three China-based companies accused of supporting Russia’s war effort in Ukraine.

Bitcoin hit the $50,000 mark for the first time since December 2021, aided by the record-breaking debut of a US exchange-traded fund for the token.

West Texas Intermediate, the US oil price, remained steady on Monday after rising for a sixth consecutive session. Morgan Stanley raised its year-end oil price forecast on signs of tight supply. After a slight fall on Monday, gold was little changed and was trading at around $2,020 an ounce.

Major events of this week:

Germany ZEW surveys expectations, Tuesday
US CPI, Tuesday
Eurozone industrial production, gross domestic product, Wednesday
BoE Governor Andrew Bailey testified before the House of Lords economic affairs panel on Wednesday
Chicago Fed President Austin Goolsbee speaks on Wednesday
Michael Barr, Fed vice chair for supervision, speaks on Wednesday
Japan GDP, industrial production, Thursday
US Empire Manufacturing, Initial Jobless Claims, Industrial Production, Retail Sales, Business Inventories, Thursday
ECB President Christine Lagarde speaks, Thursday
Atlanta Fed President Raphael Bostic speaks on Thursday
Fed Governor Christopher Waller speaks Thursday
ECB Chief Economist Philip Lane speaks, Thursday
US housing starts, PPI, University of Michigan consumer sentiment, Friday
San Francisco Fed President Mary Daley speaks, Friday
Fed Vice Chairman for Supervision Michael Barr speaks on Friday
ECB Executive Board member Isabelle Schnabel speaks on Friday