DStv Channel 403 Monday, 25 November 2024

Asian stocks mixed after US inflation data, oil inches up

TOKYO - Markets were mixed on Monday as traders weighed US inflation data that revived hopes for an early interest rate cut, but gains were tempered by geopolitical worries after fresh US-UK strikes on Huthi targets in Yemen.

The new raids on the Iran-backed rebels came after they threatened further attacks on Red Sea shipping in response to similar moves by Western forces on Friday.

The developments sent oil prices surging around four percent Friday before the gains were pared as traders eyed a pick-up in non-OPEC production and signs of a slowing global economy. Both main contracts fluctuated within a tight range Monday.

However, there are worries that the crisis, which comes as Israel continues its war with Hamas in Gaza, could erupt into a regional conflict that would likely hammer trade routes and send crude soaring past $100.

Bloomberg reported that several oil tanker owners with more than 350 vessels had paused journeys through the Red Sea, with more likely to follow as Western forces warn ships to stay away.

The prospect of a wider conflagration sending energy prices up fanned worries that inflation could bounce back -- after falling through last year to the point where central banks are considering cutting interest rates.

Still, data Friday showed US producer prices fell last month for the third time in a row -- the best run since 2020 -- providing a boost to bets on a rate cut in the first quarter.

The producer price index reading gave traders a much-needed shot in the arm after a forecast-beating rise in the consumer price index, a surge in jobs and Federal Reserve minutes suggesting officials would keep rates elevated for some time.

The figures pushed Treasury yields down, and Bloomberg said traders had factored in an 80 percent chance monetary policymakers will cut as soon as March -- compared with 62 percent last week.

The market sees close to 170 basis points in reductions for 2024. 

Wall Street's three main indexes ended Friday slightly higher, with financials acting as a drag as they warned in their corporate reports of lower interest income this year as Fed borrowing costs come down.

In Asia, Tokyo rose for a sixth successive day to build on last week's advances, which saw the Nikkei break above 35,000 for the first time since 1990 thanks to a revival of inflation and a weaker yen that helps exporters.

Shanghai also enjoyed a rare gain, after China's central bank decided not to cut short-term interest rates but pumped billions of dollars into financial markets.

Taipei also rose after pro-sovereignty candidate Lai Ching-te won Taiwan's presidential election, but his Democratic Progressive Party (DPP) lost its majority in the legislature.

The result would likely see the DPP having to work with smaller parties including the Kuomintang -- seen as more favourable to Beijing -- leading to more compromises.

There were gains in Seoul, Mumbai, Singapore and Manila but Hong Kong fell alongside Sydney, Jakarta, Bangkok and Wellington.

London and Paris opened higher while Frankfurt was flat.

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