Source: AFP
Asian markets were mixed on Monday as investors tried to shake off last week’s turmoil fueled by US recession worries, with a focus on the release of key inflation and retail data.
After a painful collapse fueled by a big loss in US job creation, stocks managed to recover in the following days and closed Friday on a healthy note.
Gains were helped by a report that showed fewer people than expected claimed jobless benefits, allaying fears that the world’s top economy is shrinking.
But analysts warned that while some calm had returned to trading levels, investors remained on edge and nervously awaited the release of the next round of indices.
Consumer price index and retail sales reports this week could give the Federal Reserve more room to cut interest rates.
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Expectations are that the bank will cut borrowing costs by 25 basis points next month and at least one more time before January, thanks to a raft of data suggesting rates are under control.
However, Fed officials expressed mixed views on the outlook for interest rates.
Governor Michelle Bowman said she still believed inflation could pick up and remained cautious about tapering too soon.
But Boston Fed chief Susan Collins said officials could start cutting soon if data continued to show rates were taming.
“The real collapse could come if we have a double whammy: higher CPI combined with lower retail sales,” warned Stephen Innes.
“This combination would have people running for the fire exit faster than you can shout ‘flat inflation,'” he wrote in his Dark Side Of The Boom newsletter.
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“And … after the latest scare about (jobs) growth, higher inflation can do the damage on its own.”
All three major indices in New York closed on a positive note on Friday.
In early Asian trade, Hong Kong, Shanghai, Singapore and Manila were down, while Sydney, Seoul, Taipei and Wellington were up.
Tokyo was closed for a holiday.
The yen weakened after last week’s gyrations that saw it soar to a six-month high against the dollar after weak US jobs data boosted Fed rate cut bets.
It came as the Bank of Japan raised its own interest rates for the second time in 17 years and signaled that more was in the works.
Comments last week aimed at reassuring investors that they would not move while markets were volatile helped settle some nerves.
However, Luca Santos at ACY Securities said: “This apparent stability may be temporary. Broader market sentiment, influenced by expectations of significant rate cuts, suggests underlying uncertainties.
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“The forecast for cumulative rate cuts of 100 basis points this year, followed by another 100 basis points in 2025, reflects a growing belief that the Federal Reserve may need to ease monetary policy more aggressively to support economic growth.”
Key figures around 02:00 GMT
Hong Kong – Hang Seng Index: DOWN 0.1 percent at 17,065.68
Shanghai Composite: DOWN 0.2 percent at 2,856.82
Tokyo – Nikkei 225: Closed due to holiday
EUR/USD: UP at $1.0924 from $1.0921 on Friday
Pound/Dollar: UP to $1.2780 from $1.2760
Dollar/yen: UP to 146.85 yen from 146.63 yen
Euro/pound: UP to 85.60 pence from 85.57 pence
West Texas Intermediate: UP 0.3 percent at $77.04 a barrel
North Sea Brent crude: UP 0.1 percent at $79.74 a barrel
New York – Dow: UP 0.1 percent at 39,497.54 (close)
London – FTSE 100: UP 0.3 per cent at 8,168.10 (close)
Source: AFP
