Asian Markets Steady After Strong Chinese Trade Data
Asian shares found their footing on Thursday, following a surge in Chinese trade data that signaled a potential uptick in domestic demand within the world's second-largest economy. The Japanese yen also stabilized after a three-day decline, finding support from Japan's potential currency intervention strategies.
Focus on Bank of England's Rate Decision
Later in the day, the Bank of England (BoE) will announce its interest rate decision, with investors closely watching for any indication of a potential June rate cut. This follows the overnight move by Sweden's Riksbank to reduce rates, highlighting Europe's diverging path from the U.S. Federal Reserve's tightening stance.
Chinese Trade Data Buoys Sentiment
MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.1%, hovering near a 15-month high reached earlier in the week. This positive sentiment was further fueled by Fed Chair Jerome Powell's reiteration of a potential policy easing later this year.
Investors will be closely monitoring the U.S. consumer inflation data for April, due next Wednesday, to gauge the direction of the Fed's policy. The data will provide insights into the effectiveness of the Fed's recent rate hikes in curbing inflation.
Chinese Imports and Exports Exceed Expectations
Chinese customs data revealed a robust 8.4% year-on-year increase in imports for April, exceeding expectations of a 4.8% rise. Exports also met forecasts, contributing to the positive market sentiment.
This strong trade data boosted Chinese shares, with bluechip stocks rising 1% and Hong Kong's Hang Seng index gaining 1.2%. Japan's Nikkei also rose 0.5%, reflecting the overall positive market sentiment.
Yen Stabilizes After Intervention Signals
The Japanese yen stabilized at 155.55 per dollar after a three-day decline. The currency had fallen sharply last week, prompting potential intervention by Japanese authorities to stem its rapid depreciation.
On Thursday, top currency diplomat Masato Kanda stated that there is no limit for reserves in currency intervention, keeping traders on edge. Additionally, minutes from the Bank of Japan's April meeting revealed a hawkish shift among policymakers, further supporting the yen's stability.
U.S. Inflation Data and Oil Prices
In the U.S. Treasuries market, yields remained relatively unchanged after edging up the previous day. Investors are likely to remain cautious ahead of the U.S. inflation report next week.
Oil prices rebounded on Thursday, recovering from two-month lows seen in the previous session. Brent futures rose 0.4% to $83.91 a barrel, while U.S. crude gained 0.5% to $79.40 a barrel.
Gold Prices Steady
Gold prices remained relatively stable, edging up 0.1% to $2,311.23 per ounce.