Written by Wayne Cole
SYDNEY (Reuters) – Asian shares rose cautiously on Monday, while the dollar and bond yields eased ahead of inflation data investors hoped would pave the way for rate cuts in the United States and Europe.
Oil prices rose 0.7% after Israel and Hezbollah traded rockets and airstrikes on Sunday, raising concerns about potential disruptions if the conflict escalates.
rose 51 cents to $79.53 a barrel, while crude oil added 50 cents to $75.33 a barrel. [O/R]
Investors are also eagerly awaiting earnings from AI darling Nvidia (NASDAQ: ) on Wednesday to see if it can live up to the market's lofty expectations.
The stock is up 150% year to date, accounting for nearly a quarter of its 17% year-to-date gain.
“Nvidia will exceed consensus expectations, they always do, but investors are more focused on seeing revenue come in at $2 billion more than analysts' consensus or we could easily see a news event,” said Chris Weston, head of research at the broker. Pepperstone.
That means Nvidia will have to report sales of $30 billion or more and Q3 guidance of $33 billion or more, he added.
Early Monday morning, and Nasdaq futures were down 0.1%. [.N]
MSCI's broadest index of Asia-Pacific shares outside Japan added 0.4%, after rising 1.1% last week, while South Korea rose 0.3%.
fell 0.7% as stocks were weighed down by a stronger yen.
The yen jumped against a weaker dollar on Friday after Federal Reserve Chairman Jerome Powell said the time had come to start easing policy and insisted the central bank did not want to see further weakness in the labor market.
“Importantly there has been a notable absence of caveats such as 'slow down' as used by some Fed officials,” noted Tapas Strickland, head of market economics at NAB.
“The jobs report on September 6 is clearly important as Powell is determined to cut rates to avoid risks to employment and keep the labor market strong,” he added. “In short, Powell increased the probability of a slow landing.”
A LOT OF DIFFERENCES ARE COMING
US personal consumption figures and core inflation are due on Friday, along with a flash reading on European Union inflation. Analysts generally think the data will be soft enough to allow for a rate cut in September.
Fed fund futures have a total of three points cut for the quarter at the September 18 meeting, and suggest a 36% chance of a big move of 50 basis points. The market also has 103 basis points of rate cuts this year and another 122 points in 2025.
“We continue to expect the FOMC to deliver the first of a series of consecutive 25bp rate cuts at the September, November, and December meetings,” said analysts at Goldman Sachs.
“Our forecast is based 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 is possible.”
Markets are also betting on a total of three quarterly cuts from the European Central Bank next month, and a total of 163 basis points of cuts by the end of 2025.
The two-year Treasury yield stood at 3.91%, down nearly 10 basis points on Friday, while the 10-year yield held at 3.79%. [US/]
The dollar fell 0.3% to 143.97 yen, down 1.3% on Friday. The euro rose to $1.1190 and fresh off a 13-month high, while the Swiss franc held steady at 0.8472 per dollar. [USD/]
A weaker dollar combined with lower bond yields to firm gold at $2,516 an ounce, and near an all-time high of $2,531.60. [GOL/]
