👀 Look into Bill Gates' portfolio to find hidden gems with new 13F filingsExplore for FREE

Asia shares edge up and dollar down; oil gains

Published 2024-08-25, 08:22 p/m
© Reuters. FILE PHOTO: A passerby gestures in front of an electronic board displaying the Nikkei stock average outside a brokerage in Tokyo, Japan, August 6, 2024. REUTERS/Willy Kurniawan/File Photo
USD/JPY
-
US500
-
NVDA
-
LCO
-
CL
-
US2YT=X
-
US10YT=X
-

By Wayne Cole

SYDNEY (Reuters) -Asian shares crept cautiously higher 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 0.8% after Israel and Hezabollah traded rocket salvos and air strikes on Sunday, stirring worries about possible supply disruptions if the conflict escalated.

Brent rose 55 cents to $79.57 a barrel, while U.S. crude added 56 cents to $75.39 per barrel. [O/R]

Investors are also anxiously awaiting earnings from AI darling Nvidia (NASDAQ:NVDA) 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 Q3 of $33 billion or above, he added.

On Monday, S&P 500 futures and Nasdaq futures were steady after starting a shade lower. [.N]

EUROSTOXX 50 futures dipped 0.2%, while FTSE futures were closed for a holiday.

MSCI's broadest index of Asia-Pacific shares outside Japan added 0.8%, after rising 1.1% last week, while South Korea was barely changed. Chinese blue chips were also near flat.

Japan's Nikkei lost 1.0% 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 that 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."

LOTS OF CUTS COMING

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 (NYSE:GS).

"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 3.91%, having fallen almost 10 basis points on Friday, while 10-year yields held at 3.79%. [US/]

© Reuters. FILE PHOTO: A passerby gestures in front of an electronic board displaying the Nikkei stock average outside a brokerage in Tokyo, Japan, August 6, 2024. REUTERS/Willy Kurniawan/File Photo

The dollar slipped a further 0.5% to 143.64 yen, having fallen 1.3% on Friday. The euro was up at $1.1191 and just off a 13-month top, while the Swiss franc held firm at 0.8461 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/]

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.