Asian stocks shaky, oil at three-year lows

[Pelican Press 0]

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****** stocks shaky, oil at three-year lows

****** stocks wobbled on Wednesday as investors gear up for US inflation data and an eagerly awaited US presidential debate, while oil prices loitered around three-year lows on concerns over a weak demand

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Democratic Vice President Kamala Harris and *********** presidential candidate Donald Trump are meeting in their first and perhaps only debate, a clash that could prove pivotal in their battle for the White House.

Investors will keep an eye on whether either candidate talk about fiscal policies and plans for the economy.

That has left investors skittish in ****** hours, with MSCI’s broadest index of Asia-Pacific shares outside Japan 0.08 per cent lower. Japan’s Nikkei fell one per cent in early trading.

“The path to 270 electoral college votes is shaping-up to be a nail-biter,” said Elias Haddad, senior markets strategist at Brown Brothers Harriman, referring to the number of electoral college votes needed to win the US presidential election.

“If Trump is the clear winner of the debate, we expect a slightly stronger USD and higher Treasury yields,” Haddad said, noting fiscal and trade policies under a Trump presidency are inflationary and could force the Fed to keep rates restrictive for longer.

“If Harris is the clear winner of the debate, we expect uneven reaction in USD and Treasuries. Fiscal and trade policies under a Harris presidency are less likely to complicate the Fed’s price stability mandate than under a Trump administration.”

Investor focus will then switch to US Labor Department’s consumer price index report for policy clues although the Federal Reserve has made it clear employment has taken on a greater focus than inflation.

The headline CPI is expected to have risen 0.2 per cent on a month-on-month basis in August, according to a Reuters poll, unchanged from the previous month.

While the Fed is widely expected to cut interest rates next week, the size of the rate cut is still up for debate, especially after a mixed labour report on Friday ******* to provide clarity on which way the central bank could go.

Markets are currently pricing in 66 per cent chance of the US central bank cutting rates by 25 basis points, while 34 per cent chance is ascribed for a 50 bps cut when the Fed delivers its decision on September 18, CME FedWatch tool showed.

The US dollar remained defensive in early trading, with the yen strengthening to 142.125 per dollar, not far from the one-month high of 141.75 touched last week.

That left the dollar index, which measures the US currency against six peers, at 101.65.

In commodities, oil prices stabilised a bit but still hovered near their lowest in three years after OPEC+ revised down its demand forecast for this year and 2025.

Brent crude futures was last 0.5 per cent higher at $US69.54 a barrel. US West Texas Intermediate (WTI) crude rose 0.6 per cent to $US66.16 a barrel.

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