Asian markets experienced declines on Tuesday as investors braced for a critical US jobs report later in the week and monitored economic signals from China.
The Federal Reserve is anticipated to lower interest rates in its upcoming meeting, but the specifics of this cut depend heavily on Friday’s non-farm payroll (NFP) figures. Analysts are closely watching the data, as a significant deviation from expectations could influence the Fed’s rate cut decision. A stronger-than-expected NFP could dampen hopes for a substantial rate cut, while a weaker report might reignite recession fears.
Charu Chanana of Saxo Capital Markets highlighted that the NFP and additional labor data will be pivotal in determining whether the Fed will opt for a 25 or 50 basis point cut. Comments from Federal Reserve officials later in the week will also be crucial for market direction.
With Wall Street closed on Monday for a public holiday, Asian markets saw limited trading activity. Major indices across Hong Kong, Sydney, Seoul, Wellington, Taipei, Manila, Mumbai, and Jakarta all recorded losses, with Tokyo showing only a slight decline. Conversely, markets in Singapore and Bangkok saw modest gains.
Investor sentiment was further dampened by persistent concerns over China’s economy. Recent data revealed that China’s manufacturing sector has contracted for a fourth consecutive month. Despite these concerns, Beijing has yet to introduce significant stimulus measures, leaving investors anxious as they await upcoming data on inflation and trade.
The yen appreciated after Bank of Japan Governor Kazuo Ueda reaffirmed intentions to raise interest rates if inflation and economic conditions align with forecasts. This followed the Bank of Japan’s unexpected rate hike in July, which had caused disruptions in markets.
In corporate news, Cathay Pacific’s shares fell following the airline’s decision to temporarily ground its A350 aircraft for inspections due to an engine component failure. The airline canceled 24 flights scheduled up until the end of Tuesday as it examines its fleet.
Key Market Figures (as of 0810 GMT):
- Tokyo (Nikkei 225): Flat at 38,686.31
- Hong Kong (Hang Seng Index): Down 0.2% at 17,651.49
- Shanghai (Composite): Down 0.3% at 2,802.98
- London (FTSE 100): Up 0.1% at 8,373.63
- Euro/Dollar: Down at $1.1062
- Pound/Dollar: Down at $1.3129
- Dollar/Yen: Down at 146.02 yen
- Euro/Pound: Up at 84.25 pence
- West Texas Intermediate: Up 0.5% at $73.90 per barrel
- Brent North Sea Crude: Down 0.4% at $77.19 per barrel
- New York (Dow): Closed for public holiday
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