Asian markets lacklustre at start of data-heavy week
Investors are waiting for release of ISM, job openings and ADP employment data, and the Fed’s Beige Book
02 September 2024 - 09:10
byWayne Cole
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
A man walks past an electronic screen outside a brokerage in Tokyo, Japan March 21, 2024. File photo: REUTERS
Sydney — Share markets were subdued in Asia on Monday as investors braced for a data-packed week culminating in a US jobs report that could decide whether a rate cut expected in September will be regular or supersized.
A holiday in the US and Canada made for thin liquidity, while wins for far-right parties in German state elections added a fresh layer of political uncertainty.
The dollar clung to much of the gains made on Friday after upbeat spending figures led markets to trim the chance of a half-point easing from the Federal Reserve.
Futures are 100% priced for a cut of 25 basis points (bps) on September 18, and imply a 33% probability of 50bps. They also have 100bps of cuts priced in by December, and 120bps for 2025.
The Bank of Canada is expected to cut again on Wednesday, with markets implying a 22% chance of 50bps.
Crucial for the Fed will be the payrolls report on Friday where analysts look for a rise of 165,000 in jobs and a dip in the unemployment rate to 4.2%.
“The risks going into this crucial release seem highly asymmetric as a solid report is very unlikely to derail the September cut,” said Barclays economist Christian Keller.
“In contrast, a weak report would likely validate the popular narrative that the US economy and labour market are on the precipice, necessitating a fast and deep cutting cycle, leading to another sharp repricing.”
Fed governor Christopher Waller and New York Fed president John Williams happen to be speaking after the job data, giving the market a near-instant reaction.
Also important this week will be the ISM surveys, Job Openings and Labor Turnover Survey (Jolts) and ADP employment, trade and the Fed’s Beige Book.
Those risks kept investors cautious with S&P 500 futures off 0.1% and Nasdaq futures down 0.2%.
Dollar finds support
Eurostoxx 50 futures were flat, while FTSE futures added 0.3%.
Asian markets struggled to follow Friday’s rally on Wall Street with Japan’s Nikkei erasing early gains to stand almost unchanged, having jumped 8.7% last week.
MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.4%, while South Korean stocks edged up 0.3%.
Chinese blue chips lost 1.2%, led by losses in real estate after a survey showed home prices growth had slowed. Shares of New World Development, a major Hong Kong property developer, dived 14% after it estimated a net loss.
The Caixin survey of manufacturing showed a pick up to 50.4 in August, topping forecasts of 50.0. Surveys on Japanese and South Korean factories both showed an improvement in activity.
The firmer dollar combined with higher bond yields to pressure gold prices at $2,497 an ounce, short of its recent all-time top of $2,531.60.
Oil prices lost more ground as the market pondered the prospect of increased supply from Opec+ in October.
Brent fell 59c to $76.34 a barrel, while US crude lost 51c to $73.04 a barrel.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Asian markets lacklustre at start of data-heavy week
Investors are waiting for release of ISM, job openings and ADP employment data, and the Fed’s Beige Book
Sydney — Share markets were subdued in Asia on Monday as investors braced for a data-packed week culminating in a US jobs report that could decide whether a rate cut expected in September will be regular or supersized.
A holiday in the US and Canada made for thin liquidity, while wins for far-right parties in German state elections added a fresh layer of political uncertainty.
The dollar clung to much of the gains made on Friday after upbeat spending figures led markets to trim the chance of a half-point easing from the Federal Reserve.
Futures are 100% priced for a cut of 25 basis points (bps) on September 18, and imply a 33% probability of 50bps. They also have 100bps of cuts priced in by December, and 120bps for 2025.
The Bank of Canada is expected to cut again on Wednesday, with markets implying a 22% chance of 50bps.
Crucial for the Fed will be the payrolls report on Friday where analysts look for a rise of 165,000 in jobs and a dip in the unemployment rate to 4.2%.
“The risks going into this crucial release seem highly asymmetric as a solid report is very unlikely to derail the September cut,” said Barclays economist Christian Keller.
“In contrast, a weak report would likely validate the popular narrative that the US economy and labour market are on the precipice, necessitating a fast and deep cutting cycle, leading to another sharp repricing.”
Fed governor Christopher Waller and New York Fed president John Williams happen to be speaking after the job data, giving the market a near-instant reaction.
Also important this week will be the ISM surveys, Job Openings and Labor Turnover Survey (Jolts) and ADP employment, trade and the Fed’s Beige Book.
Those risks kept investors cautious with S&P 500 futures off 0.1% and Nasdaq futures down 0.2%.
Dollar finds support
Eurostoxx 50 futures were flat, while FTSE futures added 0.3%.
Asian markets struggled to follow Friday’s rally on Wall Street with Japan’s Nikkei erasing early gains to stand almost unchanged, having jumped 8.7% last week.
MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.4%, while South Korean stocks edged up 0.3%.
Chinese blue chips lost 1.2%, led by losses in real estate after a survey showed home prices growth had slowed. Shares of New World Development, a major Hong Kong property developer, dived 14% after it estimated a net loss.
The Caixin survey of manufacturing showed a pick up to 50.4 in August, topping forecasts of 50.0. Surveys on Japanese and South Korean factories both showed an improvement in activity.
The firmer dollar combined with higher bond yields to pressure gold prices at $2,497 an ounce, short of its recent all-time top of $2,531.60.
Oil prices lost more ground as the market pondered the prospect of increased supply from Opec+ in October.
Brent fell 59c to $76.34 a barrel, while US crude lost 51c to $73.04 a barrel.
Reuters
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.