Volkswacht Bodensee - Markets on front foot as US jobs data provide new rate cheer

The below-forecast job openings figure bolstered optimism ahead of the closely watched non-farm payrolls report due Friday, which investors hope will confirm the economic slowdown sought by the central bank.

Markets rallied in November on growing hope that with inflation continuing to fall and other parts of the economy easing, the Fed will be able to slash rates in 2024, with some suggesting as soon as the first quarter.

The bank's statement after next week's policy meeting will be pored over by traders hoping for clues about decision-makers' thinking on rates in light of the recent data.

"A clear trend of a weakening jobs market can be observed, providing evidence that rate hikes are working their way through the economy," said Kyle Rodda at Capital.com.

But the past few days have seen fears building that the buying may have been overdone, and traders have taken a step back, with Asia particularly struggling.

"The latest US data conveyed a somewhat Goldilocks message," said Stephen Innes at SPI Asset Management.

"Economic growth appears satisfactory (as evidenced by services data), and there are indications that inflation may be poised to moderate further, given the ongoing rebalancing in the job market."

He added that "the potential risk to the Santa rally doesn't hinge on a catastrophic event (despite elevated geopolitical tensions) or an abrupt negative turn in the economic data. Instead, it revolves around the simple exhaustion of the investment flows that propelled last month's historic surge.

"Additionally, there's a concern about the possibility that rate-cut pricing for 2024 might be overdone."

While the jobs figures reinforced rate cut hopes, Wall Street's three main indexes ended mixed.

However, Asia enjoyed some much-needed buying, with Tokyo up two percent and Sydney one percent higher.

Hong Kong, Sydney, Singapore, Seoul, Bangkok, Mumbai, Wellington, Taipei and Jakarta were also on the rise.

Shanghai fell, with sentiment dented after Moody's on Tuesday warned it had downgraded its outlook for China's credit rating owing to the country's rising debt levels and concerns over its battered property sector.

Frankfurt rose at the open to extend the previous day's record high, while London and Paris also joined the advance.

Elsewhere, oil prices edged up a day after falling to a five-month low on figures showing near-record US exports, which observers said investors feared could offset pledges by Saudi Arabia and other major producers to cut output.

Bitcoin dipped slightly below after breaking above the $44,000 level last seen in April 2022, helped by optimism the United States will soon allow broader trading of the popular cryptocurrency.

- Key figures around 0810 GMT -

Tokyo - Nikkei 225: UP 2.0 percent at 33,445.90 (close)

Hong Kong - Hang Seng Index: UP 0.8 percent at 16,463.26 (close)

Shanghai - Composite: DOWN 0.1 percent at 2,968.93 (close)

London - FTSE 100: UP 0.1 percent at 7,500.42

Dollar/yen: DOWN at 146.91 yen from 147.16 yen on Tuesday

Euro/dollar: DOWN at $1.0789 from $1.0801

Pound/dollar: UP at $1.2601 from $1.2596

Euro/pound: DOWN at 85.59 pence from 85.73 pence

West Texas Intermediate: UP 0.1 percent at $72.37 per barrel

Brent North Sea crude: UP 0.3 percent at $77.40 per barrel

New York - Dow: DOWN 0.2 percent at 36,124.56 (close)

H.Kuenzler--VB