Trading
Asia shares hesitate and dollar dips; oil gains
Global Banking & Finance Review®
Company
By Wayne Cole
SYDNEY (Reuters) – Major share markets turned hesitant in Asia on Monday, while the dollar and bond yields were on the wane ahead of inflation data that investors hope will pave the way for rate cuts in the United States and Europe.
Oil prices climbed 0.7% after Israel and Hezbollah traded rocket salvos and air strikes on Sunday, stirring worries about possible supply disruptions if the conflict escalated.
Brent rose 51 cents to $79.52 a barrel, while U.S. crude added 50 cents to $75.33 per barrel. [O/R]
Investors are also anxiously awaiting earnings from AI darling Nvidia on Wednesday to see if it can match the market’s uber-high expectations.
The stock is up some 150% year-to-date, accounting for around a quarter of the S&P 500’s 17% year-to-date gain.
Nvidia will beat consensus expectations, they always do, but investors are so ingrained in seeing revenue come in $2 billion plus above the analysts’ consensus or we could easily see a sell the news event,” said Chris Weston, head of research at broker Pepperstone.
That means Nvidia would have to report sales of $30 billion or more and guidance for the third quarter of $33 billion or above, he added.
On Monday, S&P 500 futures and Nasdaq futures were both near flat in slow trade. [.N]
EUROSTOXX 50 futures dipped 0.3%, while FTSE futures were closed for a holiday.
MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.6%, after rising 1.1% last week, while South Korea fell 0.2%. Chinese blue chips lost 0.4%.
Japan’s Nikkei fell 0.8% as a stronger yen pressured exporter stocks.
The yen has jumped on a broadly weaker dollar after Federal Reserve Chair Jerome Powell said the time had come to start easing policy and emphasised the central bank did not want to see further weakening in the labour market.
Importantly there was a notable absence of caveats such as ‘gradual/gradualism’ as used by other Fed officials,” noted Tapas Strickland, head of market economics at NAB.
The jobs report on September 6 is clearly important as Powell is willing to cut rates to ward off downside risks to employment and to maintain a strong labour market,” he added. “In summary, Powell has increased the chances of a soft landing.”
Figures on U.S personal consumption and core inflation are due on Friday, along with a flash reading on European Union inflation. Analysts generally assume the data will be benign enough to allow for rate cuts in September.
Fed fund futures are fully priced for a quarter-point cut at the Sept. 18 meeting, and imply a 38% chance of an outsized move of 50 basis points. The market also has 103 basis points of easing priced in for this year and another 122 basis points in 2025.
“We continue to expect the FOMC to deliver an initial string of three consecutive 25bp cuts at the September, November, and December meetings,” said analysts at Goldman Sachs.
“Our forecast rests on our assumption that the August employment report will be stronger than the July report, but we continue to think that if instead the August report is weaker than we expect, then a 50bp cut would be likely.”
Markets are also fully priced for a quarter-point cut from the European Central Bank next month, and a total 163 basis points of easing by the end of 2025.
Yields on two-year Treasuries stood at 3.89%, having fallen almost 10 basis points on Friday, while 10-year yields held at 3.79%. [US/]
The dollar slipped a further 0.2% to 144.14 yen, having fallen 1.3% on Friday. The euro was up at $1.1187 and just off a 13-month top, while the Swiss franc held firm at 0.8474 per dollar. [USD/]
A softer dollar combined with lower bond yields to underpin gold at $2,514 an ounce, and near an all-time peak of $2,531.60. [GOL/]
(Reporting by Wayne Cole; Editing by Shri Navaratnam)
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI).
Monetary policy refers to the actions taken by a country's central bank to control the money supply and interest rates to achieve macroeconomic goals like controlling inflation and stabilizing currency.
Share markets, also known as stock markets, are platforms where shares of publicly traded companies are bought and sold. They play a crucial role in the economy by enabling companies to raise capital.
Foreign exchange, or forex, is the market where currencies are traded. It is the largest financial market in the world, facilitating international trade and investment.
An earnings report is a quarterly or annual financial statement released by a company that details its revenues, expenses, and profits, providing insights into its financial performance.
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