Stocks Wobble, Dollar Gains Ahead of US Payrolls Report
SINGAPORE (Reuters) – Asian stocks fell slightly, and investors flocked to safe-haven assets like the dollar and yen on Tuesday, as they await key economic data that could influence the US Federal Reserve’s interest rate decisions later this month.
The US ISM manufacturing survey, due later today, along with jobs data set to be released on Friday, are anticipated to play a crucial role in determining whether the Fed will implement a 25 or 50 basis point cut on September 18.
Ten-year Treasury yields edged up to 3.915%, while two-year yields remained steady at 3.931% as trading resumed in Asia following a US holiday.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.5%, weighed down by declining profits in China’s banking sector. Japan’s Nikkei dropped 0.3%, and S&P 500 futures declined by 0.2%.
“It really boils down to Friday’s number,” noted Raisah Rasid, global market strategist at J.P. Morgan Asset Management in Singapore. Policymakers are looking for a softer labor market to justify rate cuts.
“We don’t see any stress or indications that would necessitate a 50 basis point cut… the question is how long will risk assets continue to rally?”
Economists expect the ISM survey to show an improvement but remain in contractionary territory at 47.5 for August. Analysts predict a rise of 160,000 in non-farm payrolls (NFP) and a decrease in the unemployment rate to 4.2% on Friday.
“If NFP comes in on target, or close to it, that’s likely to solidify a 25-bps cut and could lead to further dollar appreciation,” said Nick Twidale, chief market analyst at ATFX Global in Sydney.
The dollar climbed about 0.2% to $1.1054 per euro, while rallies in the Australian and New Zealand dollars paused. The Aussie fell nearly 0.8% to $0.6740, and the kiwi dropped 0.7% to $0.6192.
In Hong Kong, shares of property company New World Development plummeted to a two-decade low following an estimate of a $2.6 billion loss for the year ending June.
China’s banking index decreased by 1.8% as four of the country’s five largest lenders reported lower second-quarter profits, impacted by the ongoing property sector crisis.
Gold prices hovered around $2,494 per ounce after reaching a record high above $2,500 in August.
Oil prices have struggled for momentum as demand concerns counterbalance Middle Eastern tensions. Brent crude futures fell 0.5% to $77.13 a barrel.
