|08 July, 2019

Monday outlook: Asian shares drop as aggressive U.S. rate cut expectations ease

MSCI's broadest index of Asia-Pacific shares outside Japan lost more than 1 percent

Federal Reserve Chairman Jerome Powell holds a news conference following a two-day Federal Open Market Committee meeting in Washington, U.S., June 19, 2019.

Federal Reserve Chairman Jerome Powell holds a news conference following a two-day Federal Open Market Committee meeting in Washington, U.S., June 19, 2019.

REUTERS/Kevin Lamarque
  • Asian shares retreat on strong U.S. jobs report
  • Oil prices remain unchanged
  • Bahrain and Kuwait’s indices outperform the region
  • Dollar remains unchanged, gold drops

Global markets

Asian shares dropped on Monday as a strong jobs report in the United States tempered expectations for a rate cut by the Federal Reserve.

The report showed that U.S. nonfarm payrolls jumped 224,000 in June, beating forecasts for 160,000.

MSCI’s broadest index of Asia-Pacific shares outside Japan lost more than 1 percent.

According to a Reuters report, share sentiment was also dampened by U.S. investment bank Morgan Stanley’s decision to reduce its exposure to global equities due to misgivings about the ability of policy easings to offset weaker economic data.

“We are lowering our exposure to global equities to the range we consider ‘underweight’,” Morgan Stanley’s London-based strategist Andrew Sheets said in a note. The previous range was ‘neutral’.

Oil prices

Oil prices were little changed early on Monday.

Brent crude futures were down 3 cents by 0300 GMT at $64.20.

U.S. West Texas Intermediate (WTI) was up 6 cents at $57.57 a barrel.

“A very cautious open this morning supported by a better than expected (non-farm payrolls),” Stephen Innes, managing partner at Vanguard Markets in Bangkok, told Reuters. “Traders remain incredibly cautious about the dimmer global economic overhang.”

Middle East markets

Saudi Arabia’s stock market edged 0.4 percent lower on Sunday.  Almarai Co fell 2.5%, while Saudi Basic Industries, the index's biggest stock by market capitalisation, also slipped 0.2% and lender Banque Saudi Fransi dropped almost 1%.

Dubai’s index dropped 0.5 percent. Emaar Properties fell 0.5% and DAMAC Properties dropped 2.4%. Emirates NBD was down 1.8%. Abu Dhabi’s index ended the day flat.

Qatar’s index dropped 0.5 percent, hit by selling in key blue-chip shares, as investors took profit from recent gains.

Bahrain's index gained 1.7% on the back of strong gains in Ahli United Bank which surged 4.9% amid expectations of completion of its merger with Kuwait Finance House.

Kuwait's index gained 1.2% with the index hitting a new high for the year.

Egypt’s blue-chip index EGX30 edged 0.1 percent higher and Oman’s index edged 0.2 percent lower.

Currencies

The dollar was mainly unchanged on Monday.

The dollar index .DXY, which measures the greenback against a basket of six major currencies, was last quoted at 97.277, almost flat in early Asian trade on Monday.

Precious metals

Gold prices eased on Monday.

Spot gold was down 0.2% at $1,396.80 per ounce as of 0118 GMT.

U.S. gold futures were down 0.1% at $1,399.40 an ounce.

Reporting by Gerard Aoun; Editing by Mily Chakrabarty)

(gerard.aoun@refinitiv.com)


Gain a deeper understanding of financial markets through Thomson Reuters Eikon

Our Standards: The Thomson Reuters Trust Principles

Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.

© ZAWYA 2019

More From Markets