TOKYO, May 21 (Reuters) - Asian stocks drifted lower
while the dollar held firm on Tuesday as investors awaited
minutes of the Federal Reserve's latest policy meeting to gauge
the timing and extent of possible interest rate cuts this year.
Japan's tech-heavy Nikkei edged higher though, driven by
chip shares after the Nasdaq hit a record high overnight ahead
of Nvidia earnings due on Wednesday.
Gold inched back towards Monday's all-time peak, while crude
oil prices eased on worries of U.S. interest rates staying high
for longer as Fed officials maintained a cautious view on a
recent easing of inflation.
Cryptocurrencies ether and bitcoin climbed to new six-week
highs amid speculation that the U.S. Securities and Exchange
Commission (SEC) may approve a spot ether exchange-traded fund
(ETF).
Markets currently factor in about 41 basis points of Fed
rate reductions this year, with a quarter-point cut fully priced
in for November.
Traders rushed to rebuild easing bets after data earlier
this month showed consumer price pressures mitigated in April,
following a string of three months of upside surprises at the
start of the year.
Even so, Fed officials are reluctant to declare inflation is
coming under control, with Vice Chair Philip Jefferson saying on
Monday that it was too early to tell if the slowdown is "long
lasting," and Vice Chair Michael Barr saying restrictive policy
needs more time.
MSCI's broadest index of Asia-Pacific shares outside Japan
slipped 0.6%, weighed down by the Hang Seng's
more than 1% pullback from Monday's multi-month peak.
Japan's Nikkei was a rare bright spot, rising 0.2%,
adding to the previous day's 0.73% rally.
Nasdaq futures inched 0.1% lower after the cash index
climbed 0.65% overnight to close at an all-time high. S&P 500
futures were flat after Monday's 0.1% gain.
"Market sentiment remains relatively robust, with implied
volatility low, supported by greater confidence in U.S. rate
cuts this year," Kyle Rodda, senior markets analyst at
Capital.com, wrote in a note.
At the same time, record highs for metals such as gold and
copper "is being pointed to as a signal economic activity is
improving globally, and that may be a factor keeping inflation
sticky," Rodda said.
Gold eased 0.2% to about $2,420 per ounce, after
pushing to the cusp of $2,450 for the first time overnight.
The dollar firmed slightly against major peers on Tuesday,
with the dollar index up 0.1% to 104.69 after a similar
rise on Monday.
The 10-year Treasury yield was little changed at
4.4453%, after ticking up 1.7 basis points on Monday.
Brent crude futures declined 12 cents, or 0.1%, to
$83.34 a barrel, while U.S. West Texas Intermediate crude (WTI)
eased 8 cents, or 0.1%, to $79.72 a barrel.
Meanwhile, the standout performers of Monday continued their
rise, as traders snapped up cryptocurrencies following a report
that the SEC had abruptly asked exchanges that want to trade
ether ETFs to update regulatory filings, boosting bets that
approval could come this week.
Bitcoin climbed as high as $71,957 and ether
jumped to $3,720.80, both hitting levels not seen since April 9.
"Speculation around the ether ETF has certainly played its
part in the move, throwing fuel on the crypto bull market
bonfire that had reignited after last week's cooler U.S. CPI
data," said IG analyst Tony Sycamore.
Sycamore expects bitcoin to retest the all-time high at
$73,803.25 in coming days before making a push for $80,000.