SYDNEY, RAW – Asian share markets have been in a cautious mood as concerns grow over the Chinese economy after a run of soft data, while the risk of a sub par US payrolls report kept the dollar on the defensive.
A raft of manufacturing surveys suggested supply bottlenecks were tightening again with eight of nine Asian countries reporting longer delivery times.
“The spread of the Delta variant amid still-low vaccination rates in many ASEAN economies and China’s zero-tolerance COVID strategy has prompted governments to impose restrictions and order factory/port closures,” analysts at Nomura warned.
“Input shortages and low inventories will likely lead to production cuts and delayed shipments in Q3.”
The uncertainty kept Chinese blue chips flat, though speculation of more fiscal stimulus offered some support.
MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.2 per cent on Thursday to a five-week high, helped by buying for the new quarter. Japan’s Nikkei added 0.1 per cent, while South Korea fell 0.6 per cent.
Nasdaq futures and S&P 500 futures were barely changed, while EUROSTOXX 50 futures eased 0.2 per cent and FTSE futures 0.1 per cent.
Wall Street has been preoccupied with second guessing US August payrolls, due out on Friday, with the task made all the more uncertain by a disappointing reading on ADP private payrolls but a solid ISM survey of manufacturing.
Median forecasts are for a strong rise of 750,000 jobs, but they range from 375,000 to 1.02 million with the ADP report prompting speculation the risks are to the downside.
Yet a soft number could be positive for risk assets since it would lessen pressure for an early tapering from the Federal Reserve.
Amid the jobs chatter, 10-year Treasury yields eased back to 1.30 per cent and away from the recent top of 1.375 per cent, while the US dollar index touched a one-month low.
The euro also reached its highest since early August at $US1.1856 and was last holding steady at $US1.1840.
The single currency was aided by hawkish comments from Bundesbank President Jens Weidmann who cautioned against inflation risks and called for a slowdown in bond buying by the European Central Bank.
In contrast, the Bank of Japan shows no sign of tapering its massive purchases as the country remains mired in a decades-long battle with deflation.
That kept the dollar firm at 110.00 yen and comfortably within the tight 108.71 to 110.79 range that has lasted for the past two months.
Commodities would likely benefit from any delay in Fed tapering, helping underpin gold at $US1,813 an ounce but short of resistance around $US1,823.
Oil prices eased after OPEC+ agreed to stick to a policy of adding 400,000 barrels per day a month to the market, though it also defied pressure for an even larger increase.
Brent slipped 52 cents to $US71.07 a barrel, while US crude lost 59 cents to $US68.00.