Asian equity markets mostly declined on Tuesday as investors turned cautious ahead of key US inflation readings that could affect the interest rate outlook globally. Investors also assessed data showing producer inflation in Japan was steady in April compared with a year earlier, but import prices jumped due to the yen’s weakness. Shares in Australia, South Korea, Hong Kong and China posted small losses, while Japanese stocks edged up.

WTI crude futures held above $79 per barrel on Tuesday after gaining more than 1% in the previous session, underpinned by concerns over potential supply disruptions in Canada. Markets were worried that Canada’s wildfire season could affect the country’s 3.3 million barrels per day production capacity. In the Middle East, Iraqi oil minister Hayyan Abdul Ghani said over the weekend that they will comply with OPEC+ policy on production cuts to be made at its upcoming meeting on June 1, reversing a previous statement that Iraq would not agree to any new output cuts. Investors now look ahead to monthly market reports from OPEC+ and the International Energy Agency this week for fresh insights on supply and demand factors in the oil markets.

US stock futures were little changed on Tuesday as investors braced for key inflation data this week. In regular trading on Monday, the Dow and S&P 500 shed 0.21% and 0.02%, respectively, while the Nasdaq Composite rose 0.29%. The Dow also snapped an 8-day winning streak. A New York Federal Reserve report showed that consumers’ inflation expectations over the short and long term increased in April, denting market sentiment. Investors now look ahead to PPI data on Tuesday and the CPI report on Wednesday for fresh insights on price trends. Markets also await retail sales figures and Fed Chair Jerome Powell’s remarks on Tuesday. In corporate news, Apple gained 1.7% after finalizing a deal with OpenAI to integrate ChatGPT on the iPhone. GME and AMC also both surged more than 70% after social media star “Roaring Kitty” posted on X, igniting the meme-stock craze.

Producer prices in Japan increased by 0.9% yoy in April 2024, holding steady for the second straight month and matching market consensus. It was the 39th straight month of growth in producer prices, marking the highest producer inflation since last October as cost rose further for most components: transport equipment (1.7% vs 2.1% in March), beverages & food (2.9% vs 4.0%), petroleum & coal (5.3% vs 5.3%), electrical machinery (3.3% vs 4.5%), production machinery (5.0% vs 4.6%), metal products (2.9% vs 3.4%), other manufacturing (5.3% vs 5.5%), general-purpose machinery (3.2% vs 3.8%), non-ferrous metals (11.7% vs 5.8%), ceramics, stone (6.6% vs 9.9%), business-oriented machinery (2.9% vs 4.0%), and information (3.3% vs 2.2%). Also, prices bounced back for plastic products (0.5% vs -0.3%). By contrast, prices fell for chemicals (-0.6% vs 0.2%) and iron & steel (-0.6% vs -3.1%). Monthly, producer prices rose 0.3%, the most in four months, after a 0.2% rise in the prior two months.

The annual retail inflation rate in India eased slightly to 4.83% in April of 2024 from 4.85% in the previous month, an 11-month low, and loosely in line with market estimates of 4.8%. It was the eighth straight month that Indian inflation remained within the RBI’s tolerance band of 2 percentage points from 4%, indicating that the central bank is likely to hold its key rate unchanged at the terminal level in upcoming decisions. Prices slowed for housing (2.68% vs 2.77% in March) and clothing and footwear (2.85% vs 2.97%), while prices fell faster for fuel and light (-4.24% vs -3.24%). On the other hand, inflation rose for food and beverages (7.87% vs 7.68%), aligning with the RBI’s warning that uncertain agricultural conditions underpin inflation risks in the Indian economy. From the prior month, Indian consumer prices rose by 0.48%.

Copper futures were above $4.71 per pound in May, the highest in two years, holding ahead of the $10,000 per tonne threshold as bullish long-term demand and tight supply heightened concerts of incoming shortages. Copper’s key role in the global electrification transition, from electrical vehicle charging to grid-scale energy storage, underpinned the ambitious forecasts for the metal’s utility. This was magnified by piling bets of copper usage in artificial intelligence and automation infrastructure. Meanwhile, the latest data showed that China imported more ore inputs despite the sharp increase in prices, underpinning demand from manufacturers. In turn, the low availability of material hampered margins for smelters in China, responsible for over half of global supply, resulting in a potential 10% output cut this year. High costs of committing to new mines drove giant miners toward M&A activity instead of starting new projects, recently headlined by BHP’s attempt to buy Anglo American.