Asian Equities Slightly Higher on U.S. Rate Hike Bets

Asian shares got off to a lackluster start on Monday, after rising inflation and a hawkish tone from the U.S. Federal Reserve Chair rekindled expectations that the Fed is on track to hike interest rates.  Activity was likely to be thin this session, as UK and U.S. markets are shut on Monday for the Spring Bank Holiday and Memorial Day respectively. European centers such as Germany will be observing the Whit Monday holiday.

MSCI’s broadest index of Asia-Pacific shares outside Japan was down about 0.1 percent in early trade.  Japan’s Nikkei stock index added 0.3 percent, getting a tailwind from a weaker yen and trade data released before market open showed a better-than-expected rise in April exports.

U.S. shares fell and Treasury yields and the dollar rose on Friday, after the U.S. Labor Department’s gauge on core consumer goods prices rose by 0.3 percent last month, bringing the year-on-year rise to 1.8 percent, the highest since October.  “For the first time in nearly two months, investors began rewarding the dollar for good economic data rather than punishing it for weaker data,” Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York, said in a note to clients.