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Asia shares drop ahead of inflation data from US, Europe

Asian shares

MSCI’s broadest index of Asia-Pacific shares outside Japan shed 0.4 per cent, giving it a monthly gain of 6.3 per cent

Asian shares dropped on Monday ahead of potentially market-moving inflation data from the US and Europe later in the week, and a meeting of oil producers that could stop, or extend, the recent decline in prices.

One mover was gold, which jumped to $2,009.87 an ounce and briefly reached a six-month high of $2,017.82.

The approach of the month-end could also cause some caution given the hefty gains investors are sitting on. Japan’s Nikkei dropped 0.5 per cent, but was still 8.4 per cent higher so far in November.

MSCI’s broadest index of Asia-Pacific shares outside Japan shed 0.4 per cent, giving it a monthly gain of 6.3 per cent.

Chinese blue chips dropped another 0.8 per cent, and have missed out on all the global cheer with the market 1.8 per cent lower in November so far.

China’s central bank announced it would encourage financial institutions to support private firms, including tolerance for non-performing loans.

EUROSTOXX 50 futures eased 0.3 per cent, while FTSE futures similarly dropped 0.3 per cent.

S&P 500 futures dropped 0.2 per cent and Nasdaq futures shed 0.4 per cent. The S&P 500 cash index has rallied for four weeks straight and is 8.7 per cent higher on the month so far, which would be its best performance since mid-2022.

The Fed’s favoured measure of core inflation is due on Thursday and is expected to slow to its lowest since mid-2021, reinforcing market wagers that the next move in rates will be lower.

Fed Chair Jerome Powell will have a chance to push back against the doves on Friday, and there are at least seven other Fed speakers on the docket this week.

A view we hold strongly is that central banks are not likely to deliver easing in the first half of next year absent a threat to the expansion or financial stability, says Bruce Kasman, head of global economics at JPMorgan.

Kasman added: Indeed, this message of patience is likely to be noteworthy in upcoming DM policy communications in response to recent financial market developments.

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