news/EBAY/2023.02.19/Asia shares creep higher, wary on Fed and BOJ outlooks.txt

*Asian stock markets : https://tmsnrt.rs/2zpUAr4*Nikkei flat, trading slow with U.S. on holiday*Mood cautious before Fed minutes, U.S. core inflation*Nervous wait for policy outlook from new BOJ chiefSYDNEY, Feb 20 (Reuters) - Asian shares edged up on
Monday as a U.S. holiday made for slow trading ahead of minutes
of the latest Federal Reserve meeting and a reading on core
inflation that could add to the risk of interest rates heading
higher for longer.Geopolitical tensions were ever present with North Korea
firing more missiles and talk of Russia ramping up attacks in
Ukraine before Friday's one-year anniversary of the invasion.There were reports the White House planned new sanctions on
Russia, while Secretary of State Antony Blinken on Saturday
warned Beijing of consequences should it provide material
support, including weapons, to Moscow.All of which made for a cautious start and MSCI's broadest
index of Asia-Pacific shares outside Japan
nudged up 0.7%, after sliding 2.2% last week.The bounce was led by Chinese blue chips which
firmed 1.1% as Beijing kept interest rates steady as expected,
having already poured liquidity into the banking system in
recent days.Japan's Nikkei was flat, as South Korea
added 0.3%. EUROSTOXX 50 futures and FTSE futures
both added 0.4%, extending last week's gains.S&P 500 futures barely budged, as did Nasdaq futures
. The S&P touched a two-week low on Friday as a run of
strong U.S. economic news suggested the Fed might have more to
do on interest rates even after hiking a huge 450 basis points
in 11 months."It's the most aggressive Fed tightening in decades and U.S.
retail sales are at all-time highs; unemployment at 43-year
lows; payrolls up over 500k in January and CPI/PPI inflation
reaccelerating," noted analysts at BofA. "That's a Fed mission
very much unaccomplished."They warned the failure of the S&P 500 to break resistance
at 4,200 could unleash a retreat to 3,800 by March 8.Markets have steadily lifted the expected peak for Fed funds
to 5.28%, while sharply scaling back rate cuts for later this
year and next.CORE PCE A RISKMinutes of the Fed's latest meeting due on Wednesday should
add colour on the deliberations, though they have been
superseded somewhat by barnstorming numbers on January payrolls
and retail sales.The latter means figures on U.S. personal consumption
expenditures (PCE) due this Friday are expected to show a 1.3%
jump in January, more than recovering from weakness in the prior
two months.The Fed's favoured inflation indicator, the core PCE index,
is seen rising 0.4%, the biggest gain in five months, while the
annual pace may have slowed just a fraction to 4.3%.Goldman Sachs is tipping a rise of 0.55% in the core, which
would sorely test the market's resilience.There are also at least five Fed presidents speaking this
week, to provide running commentary.Earnings season continues this week with major retailers
Walmart and Home Depot set to offer updates on
the health of the consumer.Other firms reporting include chip company Nvidia,
COVID-19 vaccine maker Moderna and e-commerce store
front eBay.The prospect of more Fed hikes has lifted Treasury yields
and generally supported the dollar, which hit a six-week top on
a basket of currencies last week.The euro was stuck at $1.0684, having touched a
six-week low of $1.0613 on Friday, while the dollar was just off
a two-month top on the yen at 134.20.Investors are anxiously awaiting Friday's testimony from the
newly nominated head of the Bank of Japan, and his thinking on
the future of yield curve control (YCC) and super-easy monetary
policy.Any hint of an early end to YCC could see yields spike
globally and send the yen surging, so analysts assume Kazuo Ueda
will be careful not to spook markets.Higher yields and a firmer dollar have not been good for
gold, which was holding at $1,843 an ounce and not far
from a five-week low of $1,807.Oil prices were trying to rally, after shedding around 4%
last week amid signs of ample supply and concerns over future
demand.Brent edged up 58 cents to $83.58 a barrel, while
U.S. crude rose 45 cents to $76.79.(Reporting by Wayne Cole; Editing by Shri Navaratnam and
Christian Schmollinger)