Asian markets started November cautiously, with most shares down as investors await key US jobs data, the presidential election, and a possible Fed rate cut. Rising oil prices and stable gold reflect concerns over Middle Eastern tensions, while earnings reports and high Treasury yields keep markets on edge.
Asian markets begin November with caution
Asian markets opened November on a cautious note, with most stocks edging lower as investors await pivotal economic indicators.
Investors are turning to Asian sovereign bonds to ride out the US election, giving a boost to markets that have already benefited from billions of dollars of foreign inflows this year https://t.co/zd4oHLiIwY
Treasury yields are near recent highs, reflecting uncertainty ahead of Friday’s US nonfarm payrolls report—a critical release before the upcoming US presidential election and the Federal Reserve’s anticipated rate cut on Wednesday.
In commodities, oil prices continued to rise, with Brent crude gaining nearly 2% to reach USD 74.13 per barrel. Speculation about potential actions by Iran from Iraq against Israel has amplified global energy market concerns.
Meanwhile, gold prices steadied at USD 2,745.69 per ounce following a sharp 1.5% decline overnight.
Asian and US markets respond to earnings and geopolitical tensions
In Asia, the MSCI Asia-Pacific shares index slipped by 0.3%, accumulating a 1.9% loss over the week. Japan’s Nikkei fell 2.1%, pressured by a stronger yen impacting exporters.
HK50 recovers modestly, testing resistance near 20,600 as bullish momentum builds, seen on the VT Markets app.
The Hong Kong Hang Seng Index (HK50) is showing signs of recovery, stabilising around 20,513 after dipping to near 20,192.
Short-term technical indicators, including the 5-, 10-, and 30-period moving averages, suggest a potential shift in momentum as buying interest grows following recent declines.
China’s blue-chip stocks edged up 0.1%, and the Hang Seng gained 0.4% after data showed an improvement in Chinese factory activity.
In the US, Nasdaq futures rose 0.3%, boosted by Amazon’s strong earnings report, which increased the company’s market cap by USD 104 billion.
However, tech leaders Meta and Microsoft declined by 4% and 6%, respectively, as rising costs in AI development offset enthusiasm from their earnings reports.
Focus on US jobs data and Federal Reserve’s rate cut decision
The Federal Reserve is widely expected to cut rates, with a 94% probability of a quarter-point reduction according to the CME FedWatch tool.
The upcoming US nonfarm payrolls report, anticipated to show an addition of 113,000 jobs in October, may influence this outlook.
Some analysts project a lower jobs figure, around 70,000, due to factors like recent hurricanes and the Boeing strike.
Treasury yields remain elevated, with the two-year yield rising 7 basis points to 4.1702% this week and the 10-year yield holding at 4.2840%, signalling the market’s anticipation of the Fed’s next move.
Currency market dynamics and bond market outlook
In foreign exchange, the British pound is trading near a 2.5-month low at USD 1.2891, affected by expectations that the UK budget may drive inflation higher, potentially deterring the Bank of England from rate cuts.
The US dollar remains strong as traders look to upcoming US economic data to guide future rate expectations.
