SYDNEY (Reuters) – Asian stock markets were mixed on Monday as risky assets found support in the bullish October payroll report in the United States, but faced another test later in the week from a reading of US inflation that could scare the rate horses.
The passage by Congress of a long-delayed US $ 1 trillion infrastructure bill has encouraged investors, although a broader social safety net plan remains elusive.
Data released over the weekend also showed that Chinese exports exceeded expectations in October to achieve a record trade surplus, although a lack of imports added to the evidence of a slowdown in domestic demand.
Movements were modest, with the MSCI’s largest Asia-Pacific stock index excluding Japan falling 0.2%. Japan’s Nikkei lost its first gains to fall 0.2%, below a recent five-week high.
The Chinese blue chips hesitated on either side of the dish, stuck in a fork that has held for nearly four months.
Futures on the Nasdaq were down 0.4%, after 10 consecutive sessions of gains that left the index looking overstrained. S&P 500 futures were down 0.2%, EUROSTOXX 50 futures fell 0.1% and FTSE futures were flat.
Friday’s robust US wage report included upward revisions from the previous two months and another solid reading on wages.
The tightening labor market combined with the dislocation of global supply chains is expected to trigger another high consumer price reading in the United States on Wednesday, with any upside surprises likely to rekindle talks of a previous hike in the price. Federal Reserve.
Analysts note that an alternative measure of core trimmed average inflation has already risen sharply to 3.6% per year.
“Another acceleration in the annualized monthly CPI will strengthen our view that the Fed is lagging behind,” said Kim Mundy, senior economist and currency strategist at the CBA.
“The longer the FOMC waits to tighten monetary policy, the greater the risk that the FOMC will tighten further to bring inflation back under control.”
No fewer than six Fed officials are speaking on Monday, with most attention likely being given to Vice President Richard Clarida, who speaks on Fed and ECB policy.
After some wild swings, Treasuries still managed to end last week with a rally, in part thanks to a huge drop in UK bond yields, where short-term debt had its best week since 2009 after the Bank of England missed a bullish opportunity.
This has led the market to push back the likely timing and pace of the tightening not only there, but also in Europe and the United States. Fed Funds now have a fully priced rate hike by September 2022, instead of July, a second step before February 2023 instead of December 2022.
Yields on 10-year Treasuries plunged 10 basis points on the week and were last at 1.47%.
The decline took some steam off the dollar, which had peaked more than a year after wage data. The dollar index stood at 94.331, from a high of 94.634.
Nonetheless, the BoE’s shock move left the pound down 1.4% from last week and traded at $ 1.3473, while the euro hit a 16-month low ahead of stabilize at $ 1.1554.
The dollar had a harder time maintaining its bullish trend against the Japanese yen, leaving it to test support around 113.25.
The decline in bond yields was a boon for gold, which does not offer a fixed return, and brought it to $ 1,818 an ounce.
Oil prices have firmed after OPEC + producers rejected a US call to ramp up production increases even as demand approaches pre-pandemic levels. [O/R]
Saudi Aramco has also increased its official selling price for crude oil to all buyers around the world.
Brent rose 84 cents to $ 83.58 a barrel, while US crude gained 85 cents to $ 82.12.
Reporting by Wayne Cole; Editing by Himani Sarkar and Richard Pullin