By Stella Qiu
SYDNEY (Reuters) -Asian stocks edged up, helped by the technology sector, while the dollar held firm on Wednesday ahead of a key U.S. inflation report and Federal Reserve policy decision that would determine the near-term outlook for interest rates.
European markets are also set to open slightly higher, with EUROSTOXX 50 futures up 0.3% and the gaining 0.4%. and Nasdaq futures turned 0.1% higher in Asia.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3%, while slid 0.5%. Technology shares in the region outperformed, with MSCI Asia-Pacific ex-Japan IT index up 1.8%.
Overnight on Wall Street, Apple (NASDAQ:) surged 7% to a record high a day after it unveiled new AI features meant to rekindle demand for iPhones. That helped rise 0.9% and the gain 0.3% to record closing highs.
Tech-heavy Taiwan and South Korean shares followed suit with gains of 1.3% and 0.4%, respectively. Chipmaker Taiwan Semiconductor Manufacturing Co jumped 3.2%.
Elsewhere, caution reigned, with still soft price data from China failing to lift sentiment much. Data showed on Wednesday that China’s consumer prices fell 0.1% in May from a month earlier, missing forecasts. On an annual basis, they rose 0.3%.
China’s blue chips wobbled between gains and losses and were last up 0.1%, while Hong Kong’s fell 1.1%, weighed by a 20% plunge in China Evergrande (HK:) New Energy Vehicle Group, after the unit of developer China Evergrande warned of losing assets.
Focus is now turning to the U.S. CPI data later in the day, which is forecast to rise a slim 0.1% in May from a month earlier, but with the core up 0.3%.
“The countdown is on, with the market going into full risk management mode,” said Chris Weston, head of research at Pepperstone. “There aren’t a whole lot of reasons to jump in and support the opening weakness either, so we could easily see further selling on open.”
“I like to use U.S. core CPI m/m as my simple playbook guide, so any number that rounds to 0.2% m/m could offer relief in risk markets and bring out USD sellers, while a number that rounds to 0.4% could see U.S. two-year yields rise and with it the USD comes in hot.”
In the currency markets, the has maintained all of its post-payrolls gains since Friday, standing tall at 105.26 against its major peers.
The euro was nursing heavy losses at $1.0737, down for a fourth straight session, amid political turmoil brought about by far right gains in European elections and the snap election in France.
Hours after the release of the U.S. CPI data, the Fed is considered certain to hold steady at its policy meeting, but the focus is on whether it keeps three rate cuts in its “dot plot” projections for this year.
Futures imply 39 basis points of Fed easing for this year, equivalent to just one and a half cuts.
Treasuries, which rallied overnight on the robust result of a 10-year Treasury auction, steadied. The 10-year yield held at 4.4079%, after falling 7 bps the previous session.
“Treasuries will react to the dot plot and possible dovish lean from Powell with a modest bull steepening. However, continued range trading is likely given ongoing “data dependent” outlook,” said analysts at TD Securities.
Oil prices extended gains for a third straight session. futures rose 0.5% to $82.36 a barrel, while futures gained 0.7% to $78.45 a barrel.
Gold prices edged 0.1% lower to $2,313.72 per ounce.
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