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GLOBAL MARKETS-Stocks bulls slow their charge, dollar near one-month lows

GLOBAL MARKETS-Stocks bulls slow their charge, dollar near one-month lows

reuters.com · 09/02/2021 04:57
GLOBAL MARKETS-Stocks bulls slow their charge, dollar near one-month lows

European shares nudge higher in early trading

Asia ex-Japan index backs off 5-week top

Most markets flat on downside risk for U.S. jobs

Bottlenecks worsen across Asian factories

Graphic: Global asset performance http://tmsnrt.rs/2yaDPgn

Graphic: World FX rates http://tmsnrt.rs/2egbfVh

Oil steadies after OPEC+ triggers fall

Oil eases after OPEC+ lifts output

By Marc Jones and Wayne Cole

- Record-high world stocks slowed their charge on Thursday as concerns grew over the Chinese economy after a run of soft data, while the risk of a sub-par U.S. payrolls report kept the dollar on the defensive.

A raft of Asian manufacturing surveys overnight had suggested supply bottlenecks were still tightening, while in Europe, Spanish unemployment fell nL8N2Q41DZ Swiss GDP data disappointed nS8N2MM003 and Hungary reported producer price inflation running at an eye-watering 14.8%. nS8N2MT058

The pan-European STOXX 600 index .STOXX crawled up 0.3%supported by travel, oil, car and chemicals companies .EU although signs of slowing global growth and a ninth day in the last 10 of gains for the euro EUR= limited the rises.

"The market seems to be believing Fed policymakers at the moment that inflation is transitory," Legal & General Investment Management portfolio manager Justin Onuekwusi said, referring to signals that the U.S. central bank will remove stimulus very gradually.

"That implies a lower-for-longer (interest rate) environment" he added, which benefits markets, especially technology stocks which have the most growth appeal.

In Asia, the uncertainty over still-low vaccination rates in many ASEAN economies and China's zero-tolerance COVID-19 strategy had kept Chinese blue-chips flat .CSI300, though speculation about more fiscal stimulus offered some support. nL1N2Q30RU

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS eased 0.1% from a five-week high. Japan's Nikkei .N225 added 0.3%, South Korea .KS11 fell 1%, whereas Hong Kong's battered tech index .HSTECH enjoyed a fourth day of unbroken gains.

Nasdaq futures NQc1 and S&P 500 futures ESc1 were starting to creep up too, having risen again on Wednesday despite some late wobbles. .N

Wall Street has been preoccupied with second-guessing U.S. August jobs data 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. nN9N2NL019 nL1N2Q30WG

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.

A soft non-farm payrolls number could be positive for risk assets, however, since it would lessen pressure for early tapering from the Federal Reserve.

"A print closer to 400k rather than 800k effectively means that the Fed's condition of "further substantial progress" in the labour market will take longer to materialise, thus delaying the tapering decision from September to November," said Rodrigo Catril, a senior FX strategist at NAB.

"Bad news in the labour market are good news for risk assets given the punchbowl will remain well liquefied for a bit longer."

ECB HAWKS SWOOP

Amid the jobs chatter, 10-year Treasury yields US10YT=RR eased back under 1.30% and away from the recent top of 1.375%, while the U.S. dollar index =USD touched a one-month low.

The euro also reached its highest since early August at $1.1856 and was last steady at $1.1845 EUR=.

The single currency was aided by hawkish comments from German central bank chief Jens Weidmann, who cautioned against inflation risks and called for a slowdown in the European Central Bank's bond buying. ECB policymakers meet next week. nF9N2N601N

In contrast, the Bank of Japan shows no sign of tapering its massive purchases as the economy remains mired in a decades-long battle with deflation.

That all helped keep the dollar firm at 110.00 yen JPY= 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 $1,812 an ounce XAU= but short of resistance around $1,823.

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. nL1N2Q30F8 O/R

"Ignoring calls from the White House for further barrel increases, we think that OPEC+ will stay on this current course unless there is a clear deterioration in the demand outlook," said analysts at RBC Capital Markets in a note.

"Moreover, we reiterate that if there is a price bias for the majority of the OPEC+ membership, it is to the upside given the high fiscal breakevens of member states."

Brent LCOc1 regained some traction in London trading to sit at $71.60 a barrel, while U.S. crude CLc1 bobbed around $68.50.


Asia stock marketshttps://tmsnrt.rs/2zpUAr4

Asia-Pacific valuationshttps://tmsnrt.rs/2Dr2BQA

Global covid caseshttps://tmsnrt.rs/3t7lQVv

(Additional reporting by Sujata Rao in London; Editing by Catherine Evans)

((marc.jones@thomsonreuters.com; +44 (0)20 7513 4042; Reuters Messaging: marc.jones.thomsonreuters.com@reuters.net Twitter @marcjonesrtrs))

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