Asian shares edge higher, Euro Stoxx Futures print mild gains as yields retreat

• Asian-Pacific equities cheer cautious optimism, market’s disappointment from RBNZ.
• Softer oil prices, upbeat Japan PMI add to the bullish bias.
• European markets brace for a good start but covid woes challenge the bulls.
• Fed Minutes, US Core PCE Inflation will be crucial to watch.

Asian stocks stay mildly bid as European traders prepare for Wednesday’s bell. Softer US Treasury yields trigger cautious optimism in the market ahead of a busy economic calendar day.

Firmer prints of Japan’s Jibun Bank Manufacturing PMI join softer oil prices, backed by US-led push for releasing the Strategic Petroleum Reserve (SPR), to print 0.12% intraday gains of the MSCI’s index of Asia-Pacific shares outside Japan. However, fears of geopolitical tension with China and doubts over domestic stimulus weigh on Nikkei 225, down 1.60% intraday at the latest.

On a broader front, the US 10-year Treasury yields drop 2.2 basis points (bps) to 1.638% whereas the Euro Stoxx Futures rise 0.10% on a day by the press time. Further, the US Dollar Index (DXY) dribbles around a 16-month high and the gold prices consolidate recent losses amid the market’s cautious mood ahead of the key US data/events.

New Zealand’s NZX 50 cheers the market’s disappointment from the Reserve Bank of New Zealand’s (RBNZ) 0.25% rate hike while Australia’s ASX 200 tracks mixed performance of China and Hong Kong equities. Further, shares in South Korea remain pressured whereas Indonesia’s IDX Composite prints mild gains even as Bank Indonesia (BI) cuts 2021 growth forecasts to 3.2-4% from 3.5-4.3% previously. Furthermore, India’s BSE Sensex tracks West stock futures and softer bond coupons to print mild gains.

Looking forward, global markets are likely to witness a pre-data trading lull ahead of the US session. Should the US inflation and Fed-linked catalysts keep rate hike odds on the table, equities are likely to witness fresh downside.

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