By Radarr Africa Business Desk
October 26 (Radarr Africa) – Asian shares traded cautiously on Monday as oil eased from six-month highs and investors prepared for a week of central bank meetings and heavy corporate earnings, with oil-driven inflation raising the prospect of further interest rate rises, Reuters reported.
Reuters, in a report carried by Business Recorder, said oil-driven inflation is likely to worry all the central banks meeting this week, and that rate rises look like “a matter of time” even if some hold for now.
Brent crude fell 1.6 per cent to $114.88 a barrel after reports that Qatari mediators were in Tehran over the weekend, working with the United States to ease regional tensions. US crude fell 1.9 per cent to $101.29. Brent futures had risen 6.2 per cent last week to their highest weekly close since mid-2022, Reuters said.
Markets expect the US Federal Reserve to hold this week but price in roughly an 80 per cent chance of a hike in December, Reuters reported, adding that similar pricing applies to the Bank of Japan and the European Central Bank. The New Zealand central bank is widely expected to raise rates on Wednesday.
Bruce Kasman of JPMorgan said: “A relatively shallow rate-hike cycle is underway.” Reuters said he expects Canada to begin tightening, with the UK and Sweden moving next month. Goldman Sachs analysts expect the Fed to skip a hike in October but deliver a second hike in December, and warned that oil futures running above their forecasts are the most important risk.
Key US data this week includes core inflation, expected at 3.1 per cent for September, and GDP, forecast to grow 3.2 per cent annualised, helped by data-centre spending, according to Reuters.
In equities, Japan’s Nikkei dipped 0.5 per cent after losing 4.0 per cent last week. South Korea’s main index fell 1.1 per cent and has lost almost 20 per cent so far this month. MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.1 per cent. Chinese blue chips lost 1.0 per cent as the Communist Party began its fifth plenum in Beijing, and the market has now fallen for 11 straight weeks on domestic demand concerns, even though exports remain strong, Reuters said.
On Wall Street and in Europe, S&P 500 futures rose 0.1 per cent and Nasdaq futures were flat. Euro Stoxx 50 futures rose 0.3 per cent, DAX futures gained 0.3 per cent and FTSE futures gained 0.4 per cent.
Earnings will test the artificial intelligence trade. Alphabet, Microsoft and Amazon report this week, alongside about one-third of S&P 500 companies, Reuters said. Consensus estimates cited by the agency are revenue of $90.6 billion and adjusted earnings per share of $4.73 for Microsoft, $202 billion and about $1.97 for Amazon, and $128 billion and $3.00 for Alphabet. Intel and Sandisk, and in Asia SK Hynix and Samsung Electronics, also report.
The 10-year US Treasury yield was 4.97 per cent, below an early-month peak of 5.36 per cent, with Treasuries rallying last week before selling off again on Friday, Reuters reported. The yen held at 156.70 per dollar, the euro rose 0.1 per cent to $1.1222 after France avoided a credit downgrade last week, and sterling held at $1.3346 ahead of UK Finance Minister John Healey’s first budget on Wednesday. Gold was slightly firmer at $4,001 an ounce, after falling more than 4 per cent last week, Reuters said.
