[1/2]A passerby walks past an electric monitor displaying the recent movements of various stock prices in front of a bank in Tokyo, Japan, March 22, 2023. REUTERS/Issei Kato/File Photo ACKNOWLEDGE RIGHTS
- Asian stock markets:
- Nikkei falls 0.5%, S&P 500 futures fall 0.2%
- Gold climbs to six-month high in choppy trading
- Eyes on US and EU inflation data, Powell event
- The oil market is tense ahead of the postponed OPEC+ meeting
SYDNEY, Nov 27 (Reuters) – Asian shares fell on Monday as potentially market-moving inflation data emerged later in the week from the United States and Europe and a meeting of oil producers that could halt or extend the recent price decline.
One driver was gold, which rose to $2,009.87 an ounce and briefly hit a six-month high of $2,017.82.
As the end of the month approaches, there may also be cause for caution given the large profits investors are sitting on. Japan’s Nikkei (.N225) fell 0.5% but is still at 8.4% so far in November.
MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) fell 0.4%, up 6.3% monthly.
Chinese blue chips (.CSI300) fell another 0.8%, missing out on global celebrations with the market down 1.8% so far in November.
China’s central bank said it would encourage financial institutions to support private companies, including tolerance for bad loans.
EUROSTOXX 50 futures fell 0.3%, while FTSE futures also fell 0.3%.
S&P 500 futures fell 0.2% and Nasdaq futures lost 0.4%. The S&P 500 cash index has rebounded for four straight weeks and is up 8.7% for the month so far, which would be its best performance since mid-2022.
The Federal Reserve’s preferred measure of core inflation is due on Thursday and is expected to fall to its lowest level since mid-2021, reinforcing market bets that the next interest rate move will be lower.
Fed Chairman Jerome Powell will have a chance to push back against the doves at a fireside chat on Friday, and at least seven more Fed speakers are scheduled this week.
“We strongly believe that central banks are unlikely to ease in the first half of 2024 unless there is a threat to expansion or financial stability,” argues Bruce Kasman, head of global economics at JPMorgan.
“In fact, this message of patience is likely to be reflected in future policy communications from developed countries in response to recent developments in financial markets.”
OIL DEPENDS ON OPEC+
European Central Bank President Christine Lagarde also appears to be in no rush to ease restrictions and will have another opportunity to drive the message home in the EU Parliament later on Monday.
EU consumer price data for November is due on Thursday and is expected to show a cooling in both headline and core interest rates, which would support market prices for cuts.
Markets have priced in 80 basis points of easing for the US economy next year and around 82 basis points for the ECB. ,
The possibility of a reduction in borrowing costs has fueled a strong rally in bonds, with 10-year Treasury yields down 36 basis points to 4.50% so far this month.
That in turn weighed on the dollar, which has lost 3% against a basket of major currencies this month.
The euro rose to $1.0952 on Monday, not far from its recent four-month high of $1.0965, while the dollar weakened to 148.97 against a broadly firmer yen.
The oil market faces a few days of tension ahead of the OPEC+ meeting on November 30, a meeting originally scheduled for Sunday but postponed as producers struggled to find a unanimous position.
African oil producers are reportedly targeting higher caps for 2024, while Saudi Arabia may extend its additional 1 million bpd voluntary production cut, set to expire at the end of December.
“Saudi Arabia and OPEC+ face the challenge of convincing markets that they can help keep oil markets tight in 2024,” commodities analysts at CBA wrote in a note.
“OPEC+ must demonstrate significant supply discipline, or at least such capability, to allay market fears of a sharp surplus in oil markets next year.”
Uncertainty erased early gains and Brent fell 55 cents to $80.03 a barrel, while U.S. crude lost 60 cents to $74.94 a barrel.
Reporting by Wayne Cole; Edited by Stephen Coates
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