Source: AFP
Most Asian markets pared gains on Monday as traders weighed the prospect of a rate cut by the U.S. Federal Reserve this year after a report on a collapse in U.S. jobs forecasts dampened hopes for a first move in June.
Wall Street’s three main indexes rose on Friday after news that the United States added 303,000 jobs in March, with investors focusing on positives for the economy rather than the impact of monetary policy.
But observers warned that the data – which also showed falling unemployment and strong wage growth – could prevent the Fed from cutting interest rates three times in 2024, as it had previously indicated.
Traders are now awaiting the release this week of minutes from the central bank’s most recent meeting, as well as the latest consumer price index reading.
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The CPI “will be a bigger test of whether the recent increase in inflation is a trend or not,” Saxo’s Redmond Wong said, referring to higher-than-expected inflation figures at the start of the year.
However, Marc Chandler at Bannockburn Global Forex warned that “the reasons for the rejection of employment data are becoming more nuanced.”
“The economy is still growing faster than what the Fed views as the long-term non-inflationary rate.”
There is now growing talk that the Fed won’t even be able to cut rates three times this year, with some suggesting that if data continues to be strong then officials could face pressure to wait until 2025.
Erik F. Nielsen at UniCredit Group added: “Based on existing economic data, that is if it is purely ‘data dependent’, the Fed could easily end up cutting rates only once this year, if at all.”
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US hiring beats expectations in March
Asian investors struggled to take over from Wall Street with most markets rising.
Hong Kong, Tokyo, Sydney, Seoul, Singapore, Mumbai and Taipei were up, but Shanghai, Manila and Wellington were down.
London and Paris were both equal at the open while Frankfurt started slightly higher.
Investors are also watching geopolitics, with Egypt’s state-linked Al-Qahera newspaper reporting on Monday that talks in Cairo aimed at reaching a truce between Israel and Hamas were positive.
The report said “significant progress has been made on several contentious points of agreement,” citing a senior Egyptian source.
But Israel said on Sunday it was still preparing for military operations in Gaza’s southernmost town of Rafah, even after announcing a partial withdrawal from the territory.
Meanwhile, eyes are also on Iran, which has threatened retaliation against Israel after it blamed it for a deadly attack on its embassy in Damascus.
Revolutionary Guard chief General Hossein Salami warned Israel “cannot escape the consequences” of last week’s strike.
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Asian shares fall, oil extends gains on Middle East worries
A glimmer of hope for an end to the conflict weighed on oil prices on Monday, with the two main contracts down more than one percent.
But they remain at around five-month highs on supply concerns should the Middle East crisis turn into a wider war between Israel and Iran, while a strong US economy and the Ukraine war also provided support.
Gold fell after hitting a new record high of $2,330.50 on Friday, having gained on interest rate cut bets and geopolitical concerns.
Keys around 0715 GMT
Tokyo – Nikkei 225: UP 0.9 percent at 39,347.04 (close)
Hong Kong – Hang Seng Index: UP 0.1 percent at 16,745.10
Shanghai Composite: DOWN 0.7 percent at 3,047.05 (close)
London – FTSE 100: FLAT at 7,911.52
Dollar/yen: UP to 151.80 yen from 151.61 yen on Friday
EUR/USD: DOWN at $1.0834 from $1.0841
GBP/USD: DOWN to $1.2630 from $1.2637
Euro/pound: UP to 85.77 pence from 85.75 pence
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![](https://images.yen.com.gh/images/a6fa76d54a796537.jpg?impolicy=cropped-image&imwidth=256)
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Asian markets were boosted by US data and renewed hopes of a rate cut
West Texas Intermediate: DOWN 1.6% to $85.50 a barrel
North Sea Brent crude: DOWN 1.7% to $89.66 a barrel
New York – Dow: UP 0.8 percent at 38,904.04 (close)
Source: AFP