Asian markets were mixed Monday following
a record finish on Wall Street, while hopes for an early US interest rate cut
were dealt a fresh blow by Federal Reserve officials looking to rein in
investor expectations.
A surge in tech titans including Apple, Amazon, Nvidia and Facebook parent
Meta pushed the S&P 500 to its first new all-time high since early 2022
thanks to bets on lower borrowing costs this year.
The rally was helped by a closely watched survey from the University of
Michigan showing a surge in consumer confidence and optimism about falling
inflation.
However, analysts warned that traders may have run a little ahead of
themselves at the end of last year as they forecast the Fed will cut rates up
to six times before December, with the first coming in March.
A string of data in recent weeks has shown inflation remains sticky and well
above the bank’s two percent target, while the jobs market continues to show
resilience despite borrowing costs sitting at two-decade highs.
Minutes from the Fed’s most recent meeting also showed decision-makers were
happy to keep monetary policy tight until they are confident prices are under
control.
On Friday, San Francisco Fed boss Mary Daly said it was likely too early to
think of moving just yet.
“While I think it’s appropriate for us to look forward and ask when would
policy adjustments be necessary so we don’t put a stranglehold on the
economy, it’s really premature to think that that’s around the corner,” she
told Fox Business on Friday.
“Do I get consistent evidence that inflation is coming down, or do I get any
early signs with the labour market starting to falter?
“Neither one of those right now is pushing me to think that an adjustment is
necessary.”
Atlanta Fed chief Raphael Bostic said that while he was open to changing his
mind, he did not expect a tweak until the third quarter, while his Chicago
counterpart Austan Goolsbee added that decision-making was “fundamentally
about the data”.
The chances of a reduction before the end of the first quarter fell last week
to less than 50 percent, having been above 80 percent the week before,
Bloomberg News reported.
Tokyo was the main winner again, extending its blockbuster start to the year
thanks to a weaker yen and rising Japanese inflation. Traders are awaiting a
Bank of Japan policy decision later in the week.
Sydney, Taipei, Manila and Wellington also rose.
However, Shanghai and Hong Kong continued their painful start to the year
caused by ongoing weakness in China’s economy and a lack of measures from
authorities aimed at kickstarting growth.
Seoul, Singapore, Jakarta and Bangkok also fell.
Oil prices retreated again as Middle East tensions were overshadowed by
worries over the global outlook and after the International Energy Agency
warned demand growth would halve in 2024.
– Key figures around 0700 GMT –
Tokyo – Nikkei 225: UP 1.6 percent at 36,546.95 (close)
Hong Kong – Hang Seng Index: DOWN 2.8 percent at 14,880.55
Shanghai – Composite: DOWN 2.7 percent at 2,756.34 (close)
Dollar/yen: DOWN at 148.01 yen from 148.10 yen on Friday
Euro/dollar: UP at $1.0907 from $1.0898
Pound/dollar: UP at $1.2716 from $1.2703
Euro/pound: DOWN at 85.74 pence from 85.76 pence
West Texas Intermediate: DOWN 0.4 percent at $72.99 per barrel
Brent North Sea Crude: DOWN 0.4 percent at $78.24 per barrel
New York – Dow: UP 1.1 percent at 37,863.80 points (close)
London – FTSE 100: UP less than 0.1 percent at 7,461.93 (close). (BSS/AFP)
