Asian shares were mostly higher on Tuesday as worries about a US recession that sent markets reeling last week eased ahead of key inflation data, while oil prices held on to gains on worries about a wider war in the Middle East.
Tokyo’s Nikkei returned from a long weekend to lead the rally and briefly rose to levels touched at the start of the month before last Monday’s slide, helped by a weaker yen and the Bank of Japan’s pledge not to raise further interest rates.
While sentiment at trading levels has calmed since last week’s turmoil, investors remain on edge after a big loss in US job creation fueled worries about the world’s top economy, while geopolitical worries continued to weigh on sentiment.
And trade was cautious ahead of the release of U.S. consumer and wholesale price data this week that could play a role in the Federal Reserve’s monetary policy decisions.
Asian markets were mixed as focus turns to US inflation data
Observers warned that the inflation readings could cause big market moves in either direction, with a weaker-than-expected print adding to worries about the economy, while a strong reading could dampen rate-cut bets.
The Fed is also walking a fine line between promoting growth and trying to bring prices under control, with some saying the recent volatile data shows officials waited too long to cut.
“One of the major risks is the timing and size of Fed rate cuts,” said Luca Santos of ACY Securities.
“If the Fed delays easing monetary policy, the US economy could be at risk of entering a deeper slowdown, leading to a possible recession.
“Conversely, if the Fed cuts rates too aggressively, it could reignite inflationary pressures or create volatility in financial markets. Balancing these risks will be critical to maintaining economic stability.”
Asian shares watch Wall St rally as US jobs data eases recession fears
After a tepid day on Wall Street, Asian markets moved in and out of positive territory to extend a strong start to the week.
Tokyo rose more than two percent — and briefly surpassed its August 2 closing price before last Monday’s decline — while Hong Kong, Sydney, Singapore, Wellington, Manila and Jakarta also they went up
Shanghai, Seoul and Taipei were sunk.
Oil prices eased but remained up about eight percent for the week on fears of a potential spiraling conflict in the Middle East and escalating tensions in major producer Russia.
The White House warned on Monday that a “significant series of attacks” by Iran and its proxies against Israel was possible as recently as this week after the assassination of top Hezbollah and Hamas leaders in late July.
Keys around 02:30 GMT
Tokyo – Nikkei 225: UP 2.2 percent at 35,785.55 (break)
Hong Kong – Hang Seng Index: UP 0.2 percent at 17,153.33
Stocks fall again as nervous traders move towards volatility
Shanghai – Composite: UP 0.1 percent to 2,860.62
EUR/USD: UP at $1.0935 from $1.0931 on Monday
GBP/USD: UP at $1.2771 from $1.2766
Dollar/yen: UP to 147.30 yen from 147.26 yen
Euro/pound: UP at 85.63 pence from 85.61 pence
West Texas Intermediate: DOWN 0.6% to $79.56 a barrel
Brent North Sea crude: Down 0.6% at $81.80 a barrel
New York – Dow: DOWN 0.4 percent at 39,357.01 (close)
London – FTSE 100: UP 0.5 per cent at 8,210.25 (close)
Source: AFP