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GLOBAL MARKETS-Asia shares struggle to rally, oil skids further

Published 2018-12-06, 09:39 p/m
Updated 2018-12-06, 09:40 p/m
© Reuters.  GLOBAL MARKETS-Asia shares struggle to rally, oil skids further

© Reuters. GLOBAL MARKETS-Asia shares struggle to rally, oil skids further

* Asian stock markets : https://tmsnrt.rs/2zpUAr4

* Asia shares ex-Japan inch up 0.4 pct, China shade firmer

* WSJ reports Fed weighing pause after Dec rate rise

* Bonds rally as markets price in less than one hike next year

* Oil slips amid doubts of an OPEC deal on output cuts

By Wayne Cole

SYDNEY, Dec 7 (Reuters) - Asian shares fought to sustain the slimmest of recoveries on Friday amid speculation the Federal Reserve might be "one-and-done" with U.S. rate hikes, while oil fell anew as producers bickered over the details of an output cut.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS nudged up 0.4 percent, though that followed a 1.8 percent drubbing on Thursday.

Japan's Nikkei .N225 added 0.2 percent and Chinese blue chips .CSI300 0.3 percent. E-Mini futures for the S&P 500 ECc1 started firmer but were last down 0.1 percent.

There was no escaping concerns over Sino-U.S. relations after the arrest of smartphone maker Huawei Technologies Co Ltd HWT.UL Chief Financial Officer Meng Wanzhou threatened to chill talks on some form of trade truce. also face a test from U.S. payrolls data later in the session amid speculation the economy was heading for a tough patch after years of solid growth.

Federal Reserve Chairman Jerome Powell emphasised the strength of the labour market in remarks made late Thursday. polled by Reuters forecast jobs rose by 200,000 in November after surging 250,000 in October. view has developed of U.S. growth normalising a little faster than expected from the fiscal 'sugar rush', while inflationary pressures remain contained given the sharp fall in the oil price," said National Australia Bank economist Tapa Strickland.

"Payrolls will be very important in helping to validate whether the economy is indeed slowing faster than expected."

The mood in risk-asset markets brightened a little after the Wall Street Journal reported Fed officials are considering whether to signal a new wait-and-see mentality after a likely rate increase at their meeting in December. only added to recent feverish speculation the central bank was almost done on hiking rates given concerns on global growth and the disinflationary impact of collapsing oil prices.

Interest rate futures 0#FF: rallied hard in massive volumes with the market now pricing in less than one hike next year. A month ago they had been wagering on three increases.

The news helped Wall Street pare steep losses and the Dow .DJI ended Thursday down 0.32 percent, while the S&P 500 .SPX lost 0.15 percent. The Nasdaq .IXIC managed to advance 0.42 percent.

FLATTENED

Treasuries extended their blistering rally, driving 10-year yields down to a three-month trough at 2.8260 percent, before last trading at 2.89 percent US10YT=TWEB .

Yields on two-year notes US2YT=TWEB fell a huge 10 basis points at one stage on Thursday and were last at 2.77 percent.

Investors also steamrolled the yield curve to its flattest in over a decade, a trend that has historically presaged economic slowdowns and even recessions.

"The sort of flattening of the yield curve that we have seen recently usually indicates that investors think the Fed is nearing the end of a tightening cycle, and that rate cuts may even be on the horizon," argued analysts at Capital Economics.

The seismic shock spread far and wide. Yields on 10-year paper sank to the lowest in six months in Germany, almost 12 months in Canada and 16 months in Australia.

The sea change in expectations took a toll on the U.S. dollar as bulls had been counting heavily on a steady widening rate differential to propel the currency.

The greenback eased against a basket of currencies to 96.801 .DXY , and fell to 112.70 yen JPY= from a 113.85 high at the start of the week. The euro was up around 0.5 percent on the week so far at $1.1376 EUR= .

Cyber currency Bitcoin took a fresh spill to be down almost 20 percent for the week at $3,444.47 BTC=BTSP .

In commodity markets, gold firmed to near a five-month peak as the dollar eased and the threat of higher interest rates waned. Spot gold XAU= stood at $1,238.44 per ounce.

Oil was less favoured, however, falling further as OPEC delayed a decision on output cuts while awaiting support from non-OPEC heavyweight Russia. futures LCOc1 slipped another 47 cents to $59.59 a barrel, while U.S. crude CLc1 lost 31 cents to $51.18. O/R

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Asia stock markets

https://tmsnrt.rs/2zpUAr4 Asia-Pacific valuations

https://tmsnrt.rs/2Dr2BQA

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Sam Holmes & Shri Navaratnam)

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