By Wayne Cole
SYDNEY (Reuters) – Asian stock markets got off to a cautious start on Monday ahead of a week packed with economic news that should underscore the relative strength of the United States and support the greenback’s continued gains.
The star of the US line is Friday’s December payrolls report, where analysts expect an increase of 150,000 with the unemployment rate at 4.2%.
They will be reviewed by data on ADP hiring, job openings and weekly jobless claims, along with surveys of manufacturing, services and consumer sentiment.
Anything more optimistic would bolster the case for smaller rate cuts by the Federal Reserve, and markets have already cut expectations to just 40 basis points for 2025.
Minutes from the Fed’s latest meeting on Wednesday will offer color to their predictions, while there will be plenty of live commentary with at least seven key policymakers speaking, including influential Fed Governor Christopher Waller.
Inflation data from the EU and Germany this week will boost the European Central Bank’s prospects for further rate cuts, while consumer prices in China on Thursday are expected to support the case for further stimulus there.
With so much risk of events ahead, investors were understandably cautious and MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.1%.
returned from vacation still in a relaxed mood and pushed up 0.1%. South Korean shares added 0.3%, although the fate of Chairman Yoon Suk Yeol appears to be less clear.
A FEW LUCKY
Futures for The and Nasdaq were slightly firmer in early trade.
Analysts at Goldman Sachs noted that the S&P 500 boasted a total return of 25% in 2024, the second year of gains above 20%, the last time that happened in 1998/99.
The recovery has been small, with almost half of the rise coming from just five stocks, but Goldman expects another 11% gain this year driven by similar earnings growth. Reports for the latest earnings season start rolling in on January 15.
The US bond market was not so happy and 10-year yields jumped to 4.631%, very close to last week’s eight-month high of 4.641%.
Investors’ appetites will be severely tested this week with the sale of $119 billion worth of new 3-year, 10-year and 3-year government bonds.
A steady rise in yields kept gains at 108,950, after rising nearly 0.9% to a high of 109,540 last week.
The euro held at $1.0298, uncomfortably close to last week’s 26-month low of $1.0225. It now faces resistance around $10,340 as trend-following funds continue to hunger for the psychological $1,000 level.
The greenback extended its gains last week and outperformed the pound, taking it to an eight-month low of $1.2349. The pound last looked anything but stable at $1.2420.
The risk of Japanese intervention kept the dollar restrained at 157.63 yen, slightly below last month’s high of 158.09.
Dollar strength was a drag on gold, holding the metal to $2,641 an ounce. [GOL/]
Oil found support in colder weather in Europe and the United States, with a winter storm bringing snow, ice and freezing temperatures to a wide swath of the US on Sunday. [O/R]
it rose 19 cents to $76.70 per barrel, while it added 27 cents to $74.23 per barrel.
