Key Takeaways
- Asian share markets opened cautiously as earnings season looms.
- Oil prices experienced volatility due to shipping and airport strikes in the Gulf.
- US CPI is expected to rise, with core inflation seen cooler.
Asian share markets began cautiously on Monday, facing challenges from the upcoming earnings season and fluctuating oil prices.
The MSCI’s broadest index of Asia-Pacific shares outside Japan showed little change, with South Korean stocks falling 1.1%.
On Wall Street, S&P 500 futures edged up 0.2%, while Nasdaq futures firmed 0.5%, indicating a cautious start to the trading week.
In Europe, EUROSTOXX 50 futures firmed 0.4%, while DAX and FTSE futures gained 0.4% and 0.3% respectively, reflecting a mixed start in the region.
The US market was on a partial holiday ahead of the earnings season, with major US banks set to kick off on Tuesday.
Economist My Bui from AMP noted that all the gains in the S&P 500 since mid-September had been in the tech sector, while investors were demanding higher yields to fund massive borrowing for AI.
The US investment-grade credit default swap index had risen sharply to its highest level since the Iran war began, suggesting investors were questioning whether AI revenues could keep pace with rising borrowing costs.
US consumer price index (CPI) is expected to rise by a hefty 0.6% to an annual 3.7%, though the core is seen cooler at 0.2% and 2.5%.
Bruce Kasman, head of global economics at JPMorgan, stated that rising energy costs were expected to lift CPI, with product prices even higher due to soaring shipping costs.
Markets imply only an 18% chance of a rate rise from the Federal Reserve this month, but an 85% chance of a hike in December, as investors wager on hikes in the EU, Japan, and the UK.
