Asian equities increase, but gains are capped by rate and inflation concerns

Tuesday saw advances in most Asian equities as they recovered some of the losses from the previous week, but gains were restrained by the expectation of important inflation data and more signals on U.S. interest rates.

Asian markets received mediocre clues from Wall Street's flat overnight finish as investors refrained from placing large wagers in advance of more interest rate hints. In Asian trading, U.S. stock index futures saw minimal movement.

The U.S. consumer price index data was the main focus for additional interest rate indications, particularly after traders started pricing in expectations of a June rate decrease following a blowout nonfarm payrolls report.

As widespread selling of riskier assets was prompted by mounting expectations of longer-term increases in U.S. interest rates, most Asian markets were nursing significant losses from the previous week.

Taiwanese equities gained as TSMC receives a $6.6 billion US subsidy

After the largest contract chipmaker in the world was awarded a $6.6 billion subsidy by the US government for an advanced chipmaking facility in Arizona, TSMC shot up nearly 4% to a new high. Additionally, the chip manufacturer upped its investment in the facility by $25 billion to $65 billion.

Chinese equities remain lower, but assurances of support have helped Hong Kong rise.

The mayor of the city, John Lee, stated that more steps were being taken by the authorities to support local stock markets, and as a result, the Hang Seng index in Hong Kong outperformed, climbing 0.7%. However, Lee did not elaborate on the precise actions that would be involved.

His remarks followed four years of consistent underperformance in Hong Kong equities as weakness in China permeated the market.

This week, there will be further Chinese economic indicators available, with trade and inflation data coming out on Thursday and Friday, respectively.

Nikkei continued to trade below 40,000 points, following severe losses the previous week due to a combination of profit-taking and pressure from a higher yen.

This week, as traders became more confident that the Japanese government would not heed its warnings to intervene in currency markets, the yen weakened and began to retrace its steps towards 1990 lows.

On the economic front, the calendar is rather quiet today.

(Sources: investing.com, reuters.com)