Asian shares rise as markets look for early rate cuts
Asian shares rallied for a fourth straight session on Monday after markets moved to price in earlier rate cuts in the United States and Europe, bullish wagers that will be tested by a swarm of central bank speakers this week.
Battered bond markets also enjoyed a welcome recovery as a benign U.S. payrolls report and upbeat productivity numbers suggested the labour market was cooling enough to obviate the need for further rate hikes from the Federal Reserve.
«This year's better-than-expected U.S.
supply-side performance raises hopes for a soft landing,» said Bruce Kasman, head of economic research at JPMorgan.
«By encouraging disinflation, strong productivity and labour supply gains might allow for job growth and low inflation to coexist,» he added. «This, in turn, would open the path for early Fed easing.»
Futures markets swung to imply a 90% chance the Fed was done hiking, and an 86% chance the first policy easing would come as soon as June.
Markets also imply around an 80% probability the European Central Bank will be cutting rates by April, while the Bank of England is seen easing in August.
Central bankers have their own chance to weigh in on this dovish outlook with at least nine Fed members speaking this week, including Chair Jerome Powell.
Also on the docket are speakers from the Bank of Japan, BoE and ECB.
An odd man out is Australia's central bank, which is considered likely to resume hiking rates at a policy meeting on Tuesday as inflation stays stubbornly high.
Elsewhere, hopes for lower borrowing costs helped MSCI's broadest index of Asia-Pacific shares outside Japan gain 0.5%, having already rallied 2.8% last week and away from one-year lows.
Japan's Nikkei rose 1.8%, after jumping 3.1% last week.
