SYDNEY- Major share markets made cautious gains on Monday as investors counted down to another US inflation reading that could well set the seal on an early rate hike from the Federal Reserve, lifting bond yields yet further.
The explosion in coronavirus cases globally also threatens to crimp consumer spending and growth just as the Fed is considering turning off the liquidity spigots, tough timing for markets addicted to endless cheap money.
That made for wary trading with S&P 500 futures adding 0.1 percent and Nasdaq futures 0.2 percent. EUROSTOXX 50 futures and FTSE futures both edged up 0.2 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.3 percent, while South Korea lost 1.0 percent.
Chinese blue chips were a fraction firmer as recent policy easing was balanced by lingering concerns over the property sector.
Analysts fear the US consumer price report on Wednesday will show core inflation climbing to its highest in decades at 5.4 percent and usher in a rate rise as soon as March.
While the December payrolls number did miss forecasts, the drop in the jobless rate to just 3.9 percent and strength in wages suggested the economy was running short of workers.
“It was consistent with the Fed’s evolving view that the labor market is getting close to or is already at maximum employment with wage pressures building,” said analysts at NatWest Markets.
“This should add to speculation about a March hike, and we have pulled our expectation for the Fed’s lift-off to occur in March instead of June.”
A raft of Fed officials will be out to offer their latest thinking this week, including Chair Jerome Powell and Governor Lael Brainard who face confirmation hearings.
