Asian stocks rose, tracking their US counterparts, as a decline in US consumer inflation expectations boosted bets on a Federal Reserve rate cut this year.
Indexes in Hong Kong, China, Australia, South Korea and Japan rose on Monday. U.S. stock futures were little changed.
The renewed optimism comes after Asian stocks suffered their worst week in more than a month, with losses exacerbated by doubts over whether the Fed will actually cut interest rates this year, as well as concerns over the implementation and effectiveness of China's property rescue package.
In Japan, the yen rose slightly against the dollar after Bank of Japan Governor Kazuo Ueda said on Monday that the central bank would move cautiously to hold inflation expectations at 2%. The yen fluctuated around 157 yen to the dollar, amid market expectations of another interest rate hike in Japan this year.
Optimism on Wall Street
Moving to U.S. stocks, Wall Street was slightly upbeat after University of Michigan data showed consumers expect inflation to rise at an annual rate of about 3.3% over the next year, down from the 3.5% forecast earlier in the month.
Later this week, the Fed's preferred core inflation gauge, due out next Friday, is expected to show a slight easing in persistent price pressures.
Federal Reserve Chairman Jerome Powell and his colleagues have stressed the need for more evidence that inflation is falling sustainably toward the central bank's 2% target before cutting the benchmark interest rate, which remains at its highest level in two decades since it was last raised in July.
Currency and Bond Performance
The US dollar fell in Asia on Monday, while US Treasury bond trading was halted with the US market closed for the Memorial Day holiday. The T+1 settlement system will be implemented after the end of the long US holiday weekend, in which the trade is settled after just one day instead of two.
Among the US central bankers set to speak during this shortened trading week are John Williams, Lisa Cook, Neel Kashkari and Lori Logan.
Data on investors' radar
Elsewhere in the market, investors will also be watching China’s industrial profits and PMI data to help gauge the strength of the world’s second-largest economy. A slew of inflation data from Australia, Japan and the euro zone is also due, boosting bets on the outlook for monetary policy.
In commodity markets, oil and gold prices have risen. This year has seen a steady run of large increases in commodity prices driven by supply constraints, rising demand and speculative activity. The Organization of the Petroleum Exporting Countries and its partners are scheduled to meet online on June 2 to discuss supply cuts.
