Stocks Stride to Record Highs Ahead of US Inflation Test

GLOBAL MARKET - SINGAPORE. Stocks rose on Thursday, with markets from Tokyo to New York at record highs, while traders counted down to U.S. data that is expected to show inflation easing and pave the way for rate cuts in September.

Bonds and the dollar were steady, keeping the yen on the weak side of 161 per dollar and near its lowest levels in decades.

Gains in heavyweight technology shares sent the S&P 500 up 1% overnight to a sixth consecutive record closing high, and in Asia, Japan's Nikkei .N225 rose 1% to a record high at 42,426. 

MSCI's broadest index of Asia-Pacific shares outside Japan also gained 1% to a two-year high. Taiwan stocks hit a record peak and Australia's ASX 200 .AXJO was within a whisker of its all-time top.

"The main driver is really the prospect of interest rate cuts," said Shane Oliver, chief economist and head of investment strategy at AMP in Sydney. "If we get a good inflation read, it will tick one of Powell's boxes."

U.S. Federal Reserve Chair Jerome Powell told lawmakers on Capitol Hill overnight that "more good data" would build the case for the U.S. central bank to cut interest rates. Futures pricing implies about a 75% chance of a cut in September.

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Economists forecast annual U.S. CPI slowed to 3.1% in June from 3.3% in May.

The Bank of Korea stood pat on interest rates and Governor Rhee Chang-yong told reporters that it was time to prepare to pivot to rate cuts.

A shift in tone at the Reserve Bank of New Zealand on Wednesday led to a sharp re-pricing in rate-cut expectations, with the benchmark two-year swap rate diving 18 basis points and the currency sliding.

Malaysia is expected to hold rates steady later in the day, and the U.S. earnings season will also begin with results from Delta Air Lines DAL.N and consumer bellwether PepsiCo, followed by bank results on Friday.

CHINA LAGGING

China stocks chimed with the market momentum on Thursday, but a drumbeat of disappointing data and talk of tariffs in its major export markets have made rallies hard to sustain. China GDP print is due on Monday.

Hong Kong's Hang Seng rose 1%, and on the mainland, the blue-chip CSI300 climbed 0.4% although it remains huddled pretty close to Tuesday's four-and-a-half-month low. 

China's yuan steadied at 7.2738 per dollar, barely stronger than an almost eight-month low made on Wednesday. 

Elsewhere, moves were modest ahead of the U.S. CPI release.

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The euro ticked higher to $1.0835. Sterling made a one-month high of $1.2854 as Bank of England's chief economist had, overnight, sounded vaguer about the timing of rate cuts than many traders had expected.

The yen hovered at 161.58 per dollar. Data showed Japan core machinery orders unexpectedly down for a second month running, challenging expectations for interest rates to rise.

The New Zealand dollar found support at its 200-day moving average and traded at $0.6095. The Australian dollar rose 0.2% to a six-month high of $0.6763. 

Treasuries were steady overnight and in Asia, with U.S. two-year yields holding at 4.62% and benchmark 10-year yields at 4.29%.

In commodity trade, oil prices edged higher on signals of strong U.S. gasoline demand. Brent futures rose 35 cents, or 0.4%, to $85.43 a barrel. U.S. crude climbed 36 cents, or 0.5%, to $82.47 a barrel.

Favourable U.S. weather has wheat futures Wv1 pressured near two-and-a-half month lows.

Gold crept 0.2% higher to $2,373 an ounce. After a selloff last week, bitcoin has steadied around $58,900.