SYDNEY (Reuters) -Share markets turned hesitant in Asia on Monday as strife in the Middle East offset more policy measures in China, while the Nikkei dived on concerns Japan’s new prime minister favoured normalising interest rates.
The stimulus rush in China did help outweigh a poor manufacturing survey and lift the blue-chip CSI300 another 7.7%, having already jumped 16% last week. The Shanghai Composite climbed 7.1%, on top of last week’s 13% rally.
Continued Israeli strikes across Lebanon added geopolitical uncertainty to the mix, though oil prices were still restrained by the risk of increased supply. [O/R]
The week is packed with major U.S. economic data including a payrolls report that could decide whether the Federal Reserve delivers another outsized rate cut in November.
The Nikkei led the early action with a dive of 4.6% as investors anxiously waited for more direction from new Prime Minister Shigeru Ishiba, who has been critical of the Bank of Japan’s easy policies in the past.
However, he sounded more conciliatory over the weekend saying monetary policy “must remain accommodative” given the state of the economy.
That helped the dollar hold around 142.10 yen, after sliding 1.8% on Friday from a 146.49 top. [USD/]
“Ishiba has endorsed the BoJ’s intention to normalise monetary policy, albeit leaving it uncertain as to the pace and timing,” said HSBC economist Jun Takazawa.
“If additional stimulus measures are realised, this would also likely buttress the recovering trend in spending, thereby strengthening the BoJ’s conviction to raise interest rates at a gradual pace,” he added. “All in all, we continue to see a constructive outlook for Japan.”
