SYDNEY- Asian shares struggled with a slide in South Korea on Monday ahead of a packed week of central bank meetings that should see borrowing costs take a step lower, while US inflation data are the last hurdle to a further policy easing there.
Chinese figures out on Monday showed consumer prices fell a surprisingly large 0.6 percent in November, pulling annual inflation down to just 0.2 percent and underlining the need for more drastic policy stimulus.
Beijing’s Central Economic Work Conference, where policymakers are expected to chart the course for the country’s economy in 2025, is also scheduled for this week, though markets are not sure if any new policies will be announced.
Political tumult in France and South Korea was joined by the fall of Syrian President Bashar al-Assad’s regime, which complicated an already fraught situation in the Middle East.
That chilled the upbeat reaction to US November payrolls that showed enough of a recovery to assuage concerns of a slowdown, but not so much as to forestall a rate cut from the Federal Reserve next week.
The next test is a US consumer price report out Wednesday where the core is seen holding at 3.3 percent for November, which should be no impediment to an easing.
“Incoming data support our call for global growth lift into year-end, despite a slipping Euro area and building political stress,” said Bruce Kasman, head of economic research at JPMorgan.
“We expect policy rates in Canada, Euro area, and Sweden to drop to 2 percent or lower over the coming year, while US and UK rates settle close to 4 percent,” he added. “This month’s meetings should point in this direction.”
Futures imply an 85 percent chance on a quarter-point easing at the Fed’s Dec. 17-18 meeting, up from 68 percent ahead of the jobs figures, and have a further three cuts priced in for next year. That outlook combined with the bull run in tech stocks to boost the Nasdaq market by over $1 trillion in value last week alone. On Monday, S&P 500 futures and Nasdaq futures were both a fraction lower.
