HONG KONG: Markets mostly rose today, following a resumption of Wall Street’s rally, but gains were muted as investors await the last tranche of US data before next week’s Federal Reserve meeting.
With a third successive interest rate cut already priced in, trading has softened ahead of key indicators this week that could still play a role in the central bank’s planning over the next year.
Most in focus are the private jobs report from payrolls firm ADP, which is due later today, and Friday’s personal consumption expenditure (PCE) index, which is the Fed’s preferred gauge of inflation.
Money markets have put the chances of a Dec 10 cut at around 90%, with another three forecast by the end of next year.
The optimism has also been boosted by reports that President Donald Trump’s top economic adviser, Kevin Hassett – a proponent of more reductions – is the frontrunner to take the helm at the Fed when Jerome Powell’s tenure ends in May.
However, while a number of bank decision-makers have thrown their hat in the ring for a reduction, observers said there appeared to still be some differences on the policy board about the need to target the soft labour market or stubbornly high inflation.
And Andrew Brenner at NatAlliance Securities said this could lead to a “hawkish cut”.
IG market analyst Fabien Yip wrote: “Friday’s core PCE index represents the final major inflation gauge before the Fed’s December policy meeting.
“Any deviation could alter expectations regarding the Fed’s policy stance, particularly as the central bank weighs inflation persistence against a softening labour market.
“The release of personal income and spending data alongside the PCE will provide additional perspective on consumer resilience,” Yip said.
While calls for a rate cut have been driven by worries over the jobs outlook and signs the world’s top economy was slowing, the National Retail Federation provided some early festive cheer by releasing an upbeat appraisal of the “Black Friday” holiday shopping weekend.
A record 202.9 million consumers shopped over the five-day stretch, topping estimates, the NRF said, adding that the reading “reflects a highly engaged consumer”.
All three main indexes on Wall Street ended in the green, and most of Asia followed suit.
Tokyo piled on more than 1% with Seoul, while Sydney, Singapore, Wellington, Taipei and Jakarta were also up.
Hong Kong, Shanghai and Manila dipped.
Bitcoin climbed back above US$90,000, recovering from this week’s swoon that saw it lose almost 10% amid a risk-off start to the week for risk assets.
However, sentiment in the crypto sector remains soft after the unit plunged last month to as low as US$80,550, having hit a record above US$126,250 in October.
Read more on Free Malaysia Today
