SYDNEY :Asian shares started the new month in the red on Monday after a court ruling threw another wrench into U.S. tariff policy and investors braced for a reading on U.S. jobs that could determine the course of rate cuts there.
A holiday in the United States created for thin conditions, though Wall Street and European futures were still trading with compact gains after retreating on Friday.
The dollar and bonds were little shiftd ahead of a busy week for data which includes surveys of manufacturing and services, and a range of labour numbers culminating in the August payrolls report on Friday.
Median forecasts are for an increase of 75,000, though estimates range widely from zero to +110,000 due to the uncertainty cautilized by July’s surprisingly weak report, while the jobless rate is seen ticking up to 4.3 per cent.
Analysts also cautioned the August report has revealn a bias to undershoot forecasts over the past decade. A result in-line or softer would cement market expectations for the Federal Reserve to cut rates at its meeting on September 17, which futures imply is a near 90 per cent probability.
“Although inflation and growth data don’t scream out for a rate cut, at this stage it would likely require a significant positive employment surprise to stop the Fed from shifting forward, given their concern about the sharp recent deceleration in job growth,” stated Michael Feroli, chief U.S. economist at JPMorgan.
The prospect of lower borrowing costs has underpinned Wall Street near record highs, and would be timely given September has been the worst performing month of the year for the S&P 500 over the past 35 years.
Early Monday, S&P 500 futures were up 0.2 per cent, while Nasdaq futures added 0.3 per cent. EUROSTOXX 50 futures firmed 0.3 per cent, while FTSE futures rose 0.1 per cent and DAX futures gained 0.3 per cent.
Japan’s Nikkei fell 0.9 per cent, tracking a drop in U.S. tech stocks on Friday, while South Korea’s market slipped 0.5 per cent.
IS IT LEGAL?
MSCI’s broadest index of Asia-Pacific shares outside Japan inched down 0.1 per cent, having hit a four-year high last week on the back of a bull run in Chinese stocks.
Trade uncertainty remained a drag after a U.S. Court of Appeals ruled many of President Donald Trump’s sweeping tariffs were illegal, but left them in place until mid-October awaiting an appeal to the Supreme Court.
The White Houtilize has other means to apply sectoral levies but it puts a question mark over trade agreements already reached or being neobtainediated. Talks with Japan have hit a stumbling block over rice, while neobtainediations with South Korea have bogged down.
“If the Supreme Court upholds the ruling, the Treasury would still required to return most of the now-close to $100 billion in additional customs duties collected over the past five months, and there is a danger that other countries would back-track on any preliminary agreements,” noted Paul Ashworth, chief North America economist at Capital Economics.
Investors will also be wary of Trump’s attacks on the indepconcludeence of the Fed this week, with Fed Governor Lisa Cook set to file fresh arguments against her firing on Tuesday.
A confirmation hearing for Stephen Miran, Trump’s pick for another Fed position, is scheduled for Thursday.
The political pressure for quicker rate cuts has been a drag on the U.S. dollar, which was pinned at 97.788 having shed 2.2 per cent last month. The euro edged up 0.1 per cent to $1.1697, while the dollar held at 147.17 yen.
In commodity markets, gold has benefited from the dollar’s decline and the outsee for lower rates to rise 2.2 per cent last week. The metal was just off a four-month top at $3,444 an ounce.
Oil prices were on the defensive ahead of a planned increase in output from OPEC+ in coming months.
Brent dropped 0.2 per cent to $67.35 a barrel, while U.S. crude eased 0.2 per cent to $63.89 per barrel.
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