Asian Stock Market: Bulls and bears jostle at monthly top ahead of central bank decisions

• Asia-Pacific shares grind near one-month highs amid cautious mood.
• Softer Japan inflation, hopes of no PBOC rate hike underpin mildly positive risk appetite.
• Holidays in Australia, light calendar elsewhere join pre-Fed anxiety to limit market moves.

Asia-Pacific markets aptly portray the pre-data anxiety as it kick-starts the key week on a softer footing despite refreshing monthly highs earlier in the day. That said, the holiday in Australia and the light calendar can also be held responsible to restrict the trading volatility as multiple central banks stay ready to rock the markets.

Against this backdrop, MSCI’s index of Asia-Pacific shares outside Japan prints mild losses after rising to nearly a five-week high earlier in the day whereas Japan’s Nikkei 225 rises 0.40% intraday to 32,370 by the press time of early Monday morning.

It’s worth noting that Japan’s Producer Price Index (PPI) for May dropped for the fifth consecutive month while Bank of Japan (BoJ) Deputy Governor Masazumi Wakatabe ruled out any change in the BoJ monetary policy during this week’s meeting as he said, “Don't expect a change from BOJ at this week's meeting.”

Elsewhere, multiple rate cuts from several lenders in China raise expectations of no rate hike from the People’s Bank of China (PBoC). Even so, indecision about the region’s biggest economy’s transition from the Covid-led recession prods the optimists in China. The same joins the absence of traders from Australia to portray a sluggish day for the Pacific markets.

On a different page, South Korea’s KOSPI drops half a percent as Bank of Korea (BoK) Governor Rhee Chang-yong cites economic fears of the economy.

Above all, the market’s anxiety ahead of this week’s monetary policy meetings from the US Federal Reserve (Fed), European Central Bank (ECB), PBoC and BoJ keep the traders on a dicey floor even if hopes of no rate hikes tease buyers.

Amid these plays, US stock futures manage to trace Wall Street’s gains at a slower pace while the Treasury bond yields remain sidelined. Further, the US Dollar Index (DXY) licks its wounds after a two-week downtrend while prices of Gold and WTI crude oil remain depressed.

Also read: S&P 500 giving back gains into the close, Fed and US CPI eyed