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Asia lags behind US, Euro futures recover

An electronic stock quote board is displayed inside a hall in Tokyo
FILE PHOTO: An electronic stock quote board is displayed inside a conference hall in Tokyo, Japan November 1, 2021. REUTERS/Issei Kato

December 6, 2021

By Wayne Cole

SYDNEY (Reuters) – Asian stock markets lagged in U.S. and European futures on Monday, while bonds shed some of their recent gains and oil rose as Saudi Arabia raised crude prices.

The mixed US jobs report in November did not shake market expectations for a stronger Federal Reserve tightening, leaving a week to wait for the consumer price report that could prompt a case. soon abate.

Omicron remains a concern as this variant spreads to about a third of US states, despite reports from South Africa that cases there have only mild symptoms.

Initial trade was cautious as MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.4%.

Japan’s Nikkei index fell 0.6 percent, even as the government considered raising its economic growth forecast to account for a record $490 billion stimulus package.

Chinese blue-chips rose 0.7 percent after state media quoted Premier Li Keqiang as saying Beijing would cut banks’ reserve requirement ratios (RRRs) “in a timely manner.” .

Shares of popular property developer China Evergrande Group fell 11% after it said there was no guarantee it would have enough money to repay its debt.

Wall Street is looking to recover from Friday’s late slide, with S&P 500 futures up 0.4% and Nasdaq futures 0.1%. EUROSTOXX 50 futures rose 1.0% and FTSE futures 0.7%.

While US headline payrolls fell sharply in November, the survey of households was much stronger with a jump of 1.1 million jobs sending the unemployment rate down to 4.2% .

“We think the Fed will view the economy much closer to full employment than previously thought,” said Barclays economist Michael Gapen.

“We therefore expect a December meeting to accelerate, followed by the first rate hike in March. We continue to expect three 25 basis points hikes in 2022.”

The futures market is almost fully priced in with gains of 0.25% in May and 0.5% in November.

REALITY’

The hawkish outlook is one of the reasons BofA investment strategist Michael Hartnett is bearish on shares for 2022, expecting an “interest rate shock” and tightening financial conditions.

He favors real assets, real estate, commodities, volatility, cash, and emerging markets, while bonds, credit and stocks can take a hit.

Currently, yields on short-term Treasuries are pushing higher but longer maturities have risen as investors bet an earlier start of the rise will mean economic growth and inflation. slower over time and lower peaks for fund rates.

The US 10-year yield fell nearly 13 basis points last week and was last at 1.38%, narrowing the two-year spread to the lowest this year. [U/S]

The short-term appreciation has helped strengthen the US dollar, especially against growth leveraged currencies seen as vulnerable to the spread of the Omicron variant.

The US dollar hit a 13-month high against the Australian and New Zealand dollars but its index was relatively steady across the majors at 96.244.

The euro fell to $1.1295, still above the recent bottom at $1.1184, while the dollar steadied above the yen safe-haven channel at 113.01.

Bitcoin dropped a fifth of its value on Saturday as profit-taking and macroeconomic concerns triggered nearly $1 billion worth of selling activity across cryptocurrencies.

The last time Bitcoin was at $48,954, as low as $41,967 over the weekend.

For commodities, gold has found some support from the decline in long-term bond yields but has traded sideways for several months in the $1,720/$1,870 range. Early Monday, it was steady at $1,785 an ounce.

Oil prices rose after top exporter Saudi Arabia raised the price of its crude to Asia and the United States, and as indirect US-Iran talks about restoring a nuclear deal appeared to be going. into a deadlock. [O/R]

Brent crude rose $1.45 to $71.33 per barrel, while US crude rose $1.46 to $67.72 per barrel.

(Reporting by Wayne Cole; Editing by Sam Holmes)

https://www.oann.com/asia-in-cautious-mood-as-omicron-spreads-u-s-cpi-looms/?utm_source=rss&utm_medium=rss&utm_campaign=asia-in-cautious-mood-as-omicron-spreads-u-s-cpi-looms Asia lags behind US, Euro futures recover

Bobby Allyn

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