Asian shares, dollar rise on expected Opec+ production cuts

Asian shares were cautiously higher on Thursday, while the dollar eased ahead of US non-farm payrolls data, and oil prices gained for a fourth day after deep production cuts pledged by Opec+ members.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4% in early Asia trade, as US futures gained. The index is up 4% this week after falling 13% in September.

Japan’s Nikkei stock index climbed 0.7% to its highest level since September, South Korea advanced 1.2% and Australia edged 0.1% higher. Hong Kong's Hang Seng index, on the other hand, fell 0.5%.

S&P 500 futures advanced 0.6%, and Nasdaq futures gained 0.9%, building on a late rebound in US stocks, which helped limit earlier losses. The S&P 500 finished Wednesday 0.20% lower and the Nasdaq Composite ended down 0.25%.

Mainland Chinese markets remain closed for holidays.

The Refinitiv Asia Energy index rose 0.7%, after the Organization of the Petroleum Exporting Countries and allies (Opec+) agreed to cut oil production the deepest since the Covid-19 pandemic began, curbing supply in an already tight market.

Oil prices rose for a fourth straight day to their highest level since mid-September. Brent crude futures were up 0.6% at $93.9 a barrel, while US West Texas Intermediate (WTI) crude futures also gained 0.6% to $88.26 a barrel.

So much for Fed pivot

Earlier this week, US economic data suggesting that the labour market and economy were slowing as well as the Reserve Bank of Australia’s (RBA) surprise move to raise rates by only 25 basis points (bps) fuelled hopes of less aggressive interest-rate hikes by central banks and lifted risk sentiment.

But those hopes were dashed after a slightly above-forecast report from the Institute for Supply Management (ISM) showed a rebound in the employment index for the US services sector.

“The optimism that buoyed financial markets earlier this week receded as US data continued to articulate the need for further, decisive central-bank policy action,” said analysts at ANZ.

“Attention is now firmly focused on the September labour-market report ... The market needs to prime for a strong number.”

US non-farm payrolls data is due on Friday and analysts polled by Reuters expect 250,000 jobs were added last month and unemployment to come in at 3.7%.

Overnight, San Francisco Federal Reserve President Mary Daly underscored the US central bank’s commitment to curbing inflation with more interest-rate hikes, though she also said the Fed will not simply barrel ahead if the economy starts to crack.

Atlanta Fed President Raphael Bostic said the US Federal Reserve’s fight against inflation is likely “still in early days”.

In currency markets, the dollar eased 0.2% against a basket of major currencies on Thursday, after climbing 0.7% overnight on hawkish comments from Fed officials.

US treasury yields were largely steady after jumping overnight.

The yield on benchmark ten-year notes eased 2 bps to 3.7368%, while the yield on two-year notes stabilised at 3.7388%.

Gold was slightly higher. Spot gold was traded at $1,719.49 per ounce.

Reuters