Despite US stock futures rising from an early dip and bond yields coming off their lowests, Asian share markets slumped on Monday ( Sep 9 ) after worries about a potential US economic downturn weighed on Wall Street.
The Asian giant’s consumer price index ( CPI ) data revealed that the Asian giant remained a factor in the global disinflation, with producer prices falling by an annual 1.8 % in August, compared to analysts ‘ expectations of a 1.4 % decline.
The CPI even surpassed forecasts for the year, rising only 0.2 % for food and goods rates, pointing to understated domestic demand.
As tech stocks declined, Japan’s Nikkei lost an additional 2.4 % on top of a nearly 6 % decline last week, bearing the brunt of the selling.
MSCI’s broadest score of Asia-Pacific stock outside Japan slipped 1.2 per share, after shedding 2.25 per cent last year, while South Korea’s business fell 1.3 per share.
On a lighter note, S&, P 500 prospects and Nasdaq prospects both edged up 0.2 per share following Friday’s drop. EUROSTOXX 50 future added 0.3 per share and FTSE future firmed 0.5 per share.
Fed bank futures dropped as investors questioned whether the mingled US August payrolls statement would convince the Federal Reserve to cut interest rates by an additional 50 basis points when it meets next year.
Businesses currently believe there is a 33 % possibility of a significant cut, in part due to Friday’s responses from Fed Governor Christopher Waller and New York Fed President John Williams, though Waller did leave the door open for more drastic lowering.
According to Barclays analyst Christian Keller, “our view of the data is that the labor market continues to cool, but we see no indication of the kind of swift decay in conditions that may call for a 50bp level reduce.”
” Significantly, we also see no sign of any taste for this in Fed contacts”, he added. We continue to urge the Fed to start its pattern with a 25-bp cut, followed by two additional 25-bp cuts at the next two meetings this year, and a 75-bp cut overall the following year.
Buyers are significantly more dovish, having projected 113 basis points of easing by Christmas and another 132 base items for 2025.
With headline inflation seen slowing from 2.9 % to 2.9 %, data on August US consumer prices released on Wednesday should support the case for a cut, if not the size.
Democratic candidates Kamala Harris and Donald Trump square off for the first day on Tuesday ahead of the Nov. 5 national poll.
ECB TO EASE
On Thursday, the European Central Bank’s quarter-point cut is completely anticipated in the industry, but it’s not yet certain whether it will ease in both October and December.
” What matters may be direction beyond September, where there’s strong stress on both attributes”, researchers at TD Securities noted in a statement.
” Income growth and service inflation remain powerful, emboldening the hawks, while progress signals are flagging softer, emboldening the birds”, they added. ” Weekly cuts are probably more consistent with the new estimates”.
Securities were boosted by the prospect of further international policy lowering, with 10-year Bank yields at 15-month lows and two-year produces at their lowest since March 2023.
Ties ran into some profit-taking on Monday as two-year provides nudged up to 3.690 per share and the 10-year to 3.743 per share, though the slope was also near its steepest since mid-2022.
The money lost some of its benefits as the dollar firmed 0.4 percent to 142. 7 yen, breaking from Friday’s trough of 141. 75. The lira held at US$ 1.1086, having quickly been as high as US$ 1.1155 on Friday.
Metal was kept subdued in the commodity markets, falling short of its most recent all-time highest of US$ 2.531 due to the decline in bond yields.
Oil costs found some aid after reporting their worst weekly decline in 11 months last year amid continual worries about global demand.
Brent bounced US$ 1.01 to reach US$ 72.07 a cylinder, while US pure firmed US$ 1.02 to US$ 68.69 per cylinder.