Equities spike before data on inflation

Amidst softening U.S. economic conditions, there were expectations that the Federal Reserve would lower interest rates this year, which led to a spike in Asian markets on Friday and robust gains in June.

However, due to sharp losses in local markets caused by worries about a possible trade war with the West and scepticism about the country's economic recovery, Chinese equities this month mostly behind their regional counterparts.

With investors staying away from Asian markets ahead of crucial inflation data that is expected to impact interest rates later on Friday, Asian stocks did not follow the mixed overnight finish on Wall Street.

Futures for the U.S. indices increased somewhat during Asian trading as concerns about a slowing economy were heightened by a few weak economic data points this week. The Fed's chosen inflation indicator, the PCE price index data, was now the main focus.

Both the TOPIX and the Nikkei 225 in Japan increased, with the latter reaching a three-month high following Tokyo's mixed consumer price index inflation data.

Although the headline CPI appeared to be rising, the underlying rate of inflation stayed low and nearly at the levels last observed in late 2022. Tokyo inflation often serves as a predictor of national inflation; Friday's figure revealed that there were little indications of rising inflation.

In June, the Nikkei and the TOPIX were expected to gain 3.2% and 1.6%, respectively, as they bounced back from a mediocre showing for the most of the second quarter.

The Shanghai Composite and Shanghai Shenzhen CSI 300 indices in China rose as well on Friday, although they were both predicted to decline by roughly 3% in June. The Hang Seng index in Hong Kong increased by 0.6% and was up more than 1% in June.

However, due to negative sentiment towards China brought on by fears of a possible trade war with the west, Chinese markets underperformed their regional counterparts this month. Beijing warned that punitive actions may be taken in response to European taxes on Chinese imports of electric vehicles.

June saw a decline in Beijing's optimism on stimulus efforts despite a number of inconsistent economic reports from the nation.

All eyes are now on PCE inflation data for the US in the afternoon.

(Sources: investing.com , reuters.com)