SYDNEY- Asian share markets were in a cautious mood on Monday after a mixed US jobs report sparked a rally in beaten-down bonds, but new hurdles lay ahead in the shape of US and Chinese inflation figures due later this week.
MSCI’s broadest index of Asia-Pacific shares outside Japan was a fraction firmer in thin trade, after losing 2.3 percent last week.
Japan’s Nikkei slipped 0.2 percent , but found support at its July low. A summary of the last Bank of Japan meeting showed members felt making yield policy more flexible would help extend the life of its super-easy stimulus.
Chinese blue chips eased 0.7 percent with investors still disappointed at the lack of major and concrete stimulus steps from Beijing.
EUROSTOXX 50 futures dipped 0.3 percent and FTSE futures 0.5 percent . Going the other way, S&P 500 futures added 0.4 percent and Nasdaq futures 0.5 percent .
With roughly 90 percent of S&P 500 earnings reported, results are 4 percent better than consensus estimates with more than 79 percent of companies beating the Street. Results due this week include Walt Disney and News Corp Data on US consumer prices are forecast to show headline inflation picking up slightly to an annual 3.3 percent , but the more important core rate is seen slowing to 4.7 percent .
Analysts at Goldman Sachs see a downside risk to the numbers in part due to falling car prices, an outcome that might help keep the bond rally alive and kicking.
In China, the market is looking for further signs of deflation with annual consumer prices seen down around 0.5 percent , and producer prices falling 4 percent .
Any upside surprises would be a test for Treasuries which steepened markedly early last week ahead of a flood of new borrowing. In the event, a mixed payrolls report helped reverse much of the losses, particularly at the short tend.
Futures imply only a 12 percent chance of a Federal Reserve rate hike in September, and 24 percent for a rise by year-end.
Michael Gapen, an economist at BofA, cautioned the market was still expecting too much policy easing next year given the recent run of resilient economic data. – Reuters
