Asia Shares Cautious as Wall St Futures Slide

Date: 04 July 2022 - 21:28

News ID: ۱۰۴۴۳۵

LONDON (Al-Jazeera) - Asian share markets started cautiously on Monday as a run of soft U.S. data suggested downside risks for this week’s June payrolls report, while the hubbub over a possible recession was still driving a relief rally in government bonds.
The search for safety kept the U.S. dollar near 20-year highs, though early action was light with U.S. markets on holiday.
Cash Treasuries were shut but futures extended their gains, implying 10-year yields were holding around 2.88 percent, having fallen 61 basis points from their June peak.
MSCI’s broadest index of Asia-Pacific shares outside Japan inched up 0.3 percent, while Japan’s Nikkei added 0.9 percent.
However, both S&P 500 futures and Nasdaq futures eased 0.4 percent, after steadying just a little on Friday.
David J Kostin, an analyst at Goldman Sachs, noted that every S&P 500 sector bar energy saw negative returns in the first half of the year amid extreme volatility.
“The current bear market has been entirely valuation-driven rather than the result of reduced earnings estimates,” he added.
“However, we expect consensus profit margin forecasts to fall which will lead to downward EPS [earnings per share] revisions whether or not the economy falls into recession.”
Earnings season starts on July 15 and expectations are being marked lower given high costs and softening data.
The payrolls report on Friday is forecast to show jobs growth slowing to 270,000 in June, with average earnings slowing a touch to 5 percent.
Yet minutes of the Fed’s June policy meeting on Wednesday are almost certain to sound hawkish given the committee chose to hike rates by a super-sized 75 basis points.
The market is pricing in about an 85 percent chance of another hike of 75 basis points this month and rates at 3.25-3.5 percent by year end.
The euro was flat at $1.0433 and not far from its recent five-year trough of $1.0349. The European Central Bank is expected to raise interest rates this month for the first time in a decade, and the euro could get a lift if it decides on a more aggressive half-point move.
The Japanese yen also attracted some safe-haven flows late last week, dragging the dollar back to 135.00 yen from a 24-year top of 137.01.