-- Shares in Asia were primed for a muted open Monday as investors look ahead to US inflation data due Tuesday that is expected to show a further slowing in core prices.
“Perhaps, Japan is finally coming out of this deflationary vortex and that could have profound implications on Japanese assets,” said Paresh Upadhyaya, director of fixed income and currency strategy at Amundi Asset Management, explaining that this will be supportive for the yen through repatriation flows, mainly going into stocks.
Further moderation in US prices would support the disinflation narrative that broadly remains in tact, despite a pullback in the number of Federal Reserve rate cuts expected this year. Swaps pricing shows three cuts are anticipated in 2024, down from six at the start of the year.Last week’s US jobs data did little to change that outlook. The jobless rate touched a two-year high, even as the number of new jobs added exceeded estimates.
The pullback in US equities on Friday reflected a decline for most of the so-called Magnificent Seven stocks that have powered the US market to fresh highs this year. Nvidia, which has added around $1 trillion to its market value in 2024 alone, fell 5.6%. A federal judge blocked Washington state from enforcing most of a law intended to boost oversight and improve living conditions at the state's only privately-run, for-profit immigration detention facility. Friday's decision by U.S. District Judge Benjamin Settle will benefit Geo Group, the owner of the Northwest Immigration and Customs Enforcement Processing Center in Tacoma.