Asian equities opened slightly lower on Wednesday ahead of a critical inflation report and as the US debt ceiling impasse damps investor sentiment.

Benchmark indexes fell in Japan, South Korea and Australia while futures for Hong Kong stocks indicated a slight gain. Contracts for the S&P 500 and Nasdaq 100 were fractionally higher in Asia after the indexes fell 0.5% and 0.7%, respectively, on Tuesday.

The US gauges have been stuck in narrow trading ranges as investors weigh the potential end of the Federal Reserve’s interest rate hikes against the possibility of an economic slowdown. It’s a similar story for global stocks, which have largely moved sideways for more than a month, as measured by the MSCI World Index.

An index of dollar strength was little changed early Wednesday after edging higher for a second day. Major currencies also traded in a narrow ranges. The Australia dollar was steady following a 0.3% drop Tuesday, when the government flagged a budget surplus that may help ease inflation.

Bond yields were little changed in Australia and New Zealand following minor moves in Treasuries overnight.

Treasury yields steadied following muted reaction in the futures market after President Joe Biden and congressional Republicans made little tangible progress toward averting a first-ever US default. They pledged negotiations on spending that would open the door to a possible agreement, with Biden and House Speaker Kevin McCarthy to meet again on Friday.

“I don’t think there is likely to be any market reaction until will get closer to the X-date — that is still a moving target, likely into June and quite possibly later into July,” said Jason Wong, currency strategist at Bank of New Zealand Ltd. “Meanwhile, headlines around negotiations are more noise than signal and mostly market-neutral.”

The US inflation report to come later Wednesday is expected to show headline CPI rose by 5% in April on a year-on-year basis, indicating that price pressures are still uncomfortably high for the Fed. This will be followed on Thursday by consumer and producer price data from China, which is forecast to show easing inflation pressure in the Asian powerhouse.

Fed officials, including New York chief John Williams, are watching for signs of a credit crunch. Williams said he wasn’t including a rate cut in his forecast for this year at an event Tuesday. He left the door open on the odds of a Fed pause. Swaps suggest traders are expecting at least 50 basis points in cuts by the end of 2023.

The S&P 500 has been stuck trading between 3,800 and 4,200 this year. Tom Essaye, founder of The Sevens Report newsletter, thinks equities could break above that range if “data points more convincingly towards a soft landing, there are no more regional bank failures, core inflation drops faster than expected, the Fed confirms the pause and a debt ceiling deal is reached.”

Bears, according to Jonathan Krinsky, chief market technician at BTIG, are looking for the benchmark to fall below 3,800.

Shares of Airbnb fell postmarket after its second quarter sales outlook fell short of some analysts’ estimates, suggesting rising prices may be curbing enthusiasm for travel. Rivian Automotive Inc. climbed after the electric-vehicle maker reaffirmed its annual production plans.

Elsewhere in markets, oil held most of its recent rally after the Biden administration announced plans to replenish strategic reserves. Gold inched higher and Bitcoin traded below $28,000.

Key events this week:

• US CPI, Wednesday
• China PPI, CPI, Thursday
• UK BOE rate decision, industrial production, GDP, Thursday
• US PPI, initial jobless claims, Thursday
• Group of Seven finance minister and central bank governors meet in Japan, Thursday
• US University of Michigan consumer sentiment, Friday
• Fed Governor Philip Jefferson and St. Louis Fed President James Bullard participate in panel discussion on monetary policy at Stanford University, Friday.

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.1% as of 9:18 a.m. Tokyo time. The S&P 500 fell 0.5% Tuesday
• Nasdaq 100 futures rose 0.1%. The Nasdaq 100 fell 0.7%
• Japan’s Topix index fell 0.2%
• Australia’s S&P/ASX 200 Index fell 0.4%
• Hong Kong’s Hang Seng futures rose 0.3%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0971
• The Japanese yen was little changed at 135.29 per dollar
• The offshore yuan was little changed at 6.9229 per dollar
• The Australian dollar rose 0.1% to $0.6770

Cryptocurrencies

• Bitcoin rose 0.2% to $27,718.17
• Ether rose 0.2% to $1,853.91

Bonds

• The yield on 10-year Treasuries was little changed at 3.51%
• Japan’s 10-year yield fell 0.5 basis point to 0.415%
• Australia’s 10-year yield advanced two basis points to 3.46%

Commodities

• West Texas Intermediate crude fell 0.2% to $73.53 a barrel
• Spot gold rose 0.1% to $2,036.88 an ounce

This story was produced with the assistance of Bloomberg Automation.

--With assistance from Peyton Forte, Cristin Flanagan and Ruth Carson.