Asia stocks brace for US inflation test, China data

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Bank Of Japan,Inflation Figures

Asian share markets made a cautious start on Monday in a week where inflation figures could make or break hopes for earlier U.S. rate cuts, while Chinese...

Passersby walk past an electric screen displaying a graph showing Japan's Nikkei share average movements outside a brokerage in TokyoSYDNEY - Asian share markets made a cautious start on Monday in a week where inflation figures could make or break hopes for earlier U.S. rate cuts, while Chinese activity data will test optimism about a sustained recovery in the world's No. 2 economy.

Japan's Nikkei eased 0.2%, still saddled with speculation further losses for the yen could lead the Bank of Japan to raise rates in the next few months. Also due are figures on U.S. producer prices, retail sales and jobless claims, along with final reports on European inflation that should reinforce expectations for a June rate cut from the European Central Bank.There are a host of Fed speakers this week to update markets on their thinking, including Fed Chair Jerome Powell who appears with the head of the Dutch central bank on Tuesday.

"A straightforward interpretation of financial market performance is that there is more underlying strength in the global economy than had been anticipated and higher interest rates are reflecting rather than impeding global growth," says Bruce Kasman, head of economic research at JPMorgan.The relative outperformance of the U.S. economy continues to underpin the dollar, while only the threat of Japanese intervention is stopping it from re-testing the 160 yen barrier.

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