SYDNEY: Japan's Nikkei hit a record high on Tuesday, while investors elsewhere waited anxiously to see if Federal Reserve Chair Jerome Powell would sound supportive of rate cuts after evidence the U.S. labour market is cooling.
Europe is set for a lower open, with EUROSTOXX 50 futures off 0.3 per cent and FTSE flat. S&P 500 futures gained 0.2 per cent and Nasdaq futures firmed 0.3 per cent, after Wall Street equities inched higher to close at record highs on Monday.
The Nikkei index jumped 1.5 per cent to a fresh record high thanks to gains in semiconductor shares, while MSCI's broadest index of Asia-Pacific shares outside Japan was last flat, having hit a two-year top a day earlier.
Taiwanese shares also hit a record high before running into profit-taking and were last down 0.3 per cent. Chinese blue chips edged 0.1 per cent higher and Hong Kong's Hang Seng index lost 0.3 per cent.
Powell is set to appear before Congress on Tuesday and Wednesday, as investors wagered a slew of soft labour market data has greatly increased the chance of a rate cut in September to about 80 per cent.
"I think markets got a degree of optimism that Powell will be cautiously dovish and that the CPI later this week will confirm that disinflation is back on track," said Shane Oliver, chief economist at AMP in Sydney.
"Which I think seems reasonable to me. When you look at the US economy, most of the data is softening. Jobs figures on Friday were on the soft side, unemployment trending higher. Most labour market leading indicators are cooling down."
The main economic event this week will be the U.S. consumer price report on Thursday, where headline inflation for June is expected to slow to 3.1 per cent, from 3.3 per cent in May, with core inflation forecast steady at 3.4 per cent.
For the remainder of 2024, markets have fully priced in a total 50 basis points of easing, equivalent to two rate cuts.
In foreign exchange markets, the euro held its ground at US$1.0825 after Monday's sharp swings as investors come to terms with a hung parliament in France, which points to potential political gridlock but removes many fiscal concerns stemming from far-right or leftist victories.
The U.S. dollar steadied near four-week lows at 105.01 against a basket of currencies, offering some respite to the battered yen and yuan.
The Japanese yen held at 161 per dollar, having plumbed a 38-year low of 161.96 per dollar last week, while the offshore Chinese yuan hovered at 7.2903 per dollar, after gaining for four straight sessions to move away from 7-1/2 month lows.
Treasuries were steady, having ended Monday mixed. The 10-year government bond yield held at 4.2803 per cent, having slipped for four straight sessions, while 2-years were flat at 4.6306 per cent, nearing a three-month low.
In commodity markets, gold rose 0.2 per cent to US$2,363.31 an ounce , having fallen 1.4 per cent overnight.
Oil prices fell after a hurricane that hit a key U.S. oil producing hub in Texas caused less damage than expected.
Brent futures fell 0.3 per cent to US$85.49 a barrel, while U.S. West Texas Intermediate (WTI) crude also slipped 0.3 per cent to US$82.07.