Asian share markets rose on Monday as expectations of U.S. interest rate cuts helped calm concerns about economic slowdown:
- MSCI Asia-Pacific Index (excluding Japan) rose 0.7%, boosted by South Korea (+1.1%)
- Japan’s Nikkei fell 1.4% after a yen rebound
- Chinese blue chips remained flat
Bond markets suggest:
- 85% chance the Fed cuts rates in September
- Over 100 basis points of rate cuts expected by mid-2025
This shift came after weak U.S. jobs data, which showed:
- A sharp slowdown in employment growth
- 3-month average job growth dropped to 35,000 from 231,000
Political Moves Spark Concern:
- Trump fired the U.S. labor statistics chief, raising doubts over data credibility
- Trump to appoint a Fed governor, increasing fears of politicised monetary policy
“Fed credibility and data veracity are now under the spotlight,” said NAB’s Ray Attrill.
Wall Street Futures:
- S&P 500 +0.4%, Nasdaq +0.4%, EUROSTOXX 50 +0.6%, FTSE +0.5%
U.S. Treasury Yields fell sharply:
- 2-year yields dropped 25 basis points on Friday – the biggest one-day drop since Aug 2023
Dollar Impact:
- Dollar Index fell from 100.25 → 98.80
- Yen strengthened; USD/JPY at 147.79 (-2.3% Friday)
- Euro and Sterling gained on dollar weakness
Earnings Season Boost:
- 63% of S&P 500 firms beat expectations
- Earnings growth revised up to 9.8%
Commodities:
- Gold steady at $3,357/oz
- Oil slipped:
Brent at $69.52, WTI at $67.24 after OPEC+ increased output