Asia shares edge up, rate hopes face data test
By Wayne Cole
SYDNEY (Reuters) — Asian shares started firmer on Monday while gold hit another record high in a busy week for economic data that will test market wagers for early and aggressive rate cuts from major central banks next year.
In particular, the U.S. November payrolls report on Friday needs to be solid enough to support the soft-landing scenario, but not so strong as to threaten the chance of easing. Median forecasts are for payrolls to rise 180,000, keeping unemployment steady at 3.9%.
Many analysts suspect risks are to the upside, with Goldman Sachs tipping 238,000 including a chunk of workers returning from strikes, and a jobless rate of 3.8%.
There was also still a risk the Israel-Hamas war could widen into a broader conflict with three commercial vessels coming under attack in the southern Red Sea.
MSCI's broadest index of Asia-Pacific shares outside Japan was still up 0.6%, led by gains in South Korea and Australia. Japan's Nikkei dipped 0.4% as the yen extended recent gains.
S&P 500 futures were flat, after finishing at a 20-month high on Friday, while Nasdaq futures lost 0.2%. The S&P 500 is up 19% for the year so far and just 4% away from its all-time peak.
The latest surge was stoked by wagers the next move by the Federal Reserve will be to cut rates, with Fed Chair Jerome Powell on Friday declining the opportunity to push back hard against aggressive market pricing.
Futures now imply a 71% chance the Fed will ease as soon as March, up from 21% a week ago, and are pricing in around 135 basis points of cuts for all of 2024.
The rusting turnaround in Treasuries has been nothing short of astonishing as two-year yields fell 41 basis points in just a week, the best performance since the mini-crisis in
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