Volkswacht Bodensee - Markets mixed ahead of US inflation data, Fed decision

A forecast-beating read on jobs on Friday -- and a pick-up in consumer sentiment -- tempered expectations for interest rate cuts in the new year but were not enough to jolt confidence that decision-makers have finished with their tightening cycle.

Readings on consumer prices and retail sales are due this week, as is the Fed's meeting and boss Jerome Powell's statement, which will be parsed for indications of officials' plans.

Investors will also be keeping an eye on decisions by the European Central Bank and Bank of England this week.

"The run of data that preceded Friday's non-farm payrolls data has mostly been softer, and equity markets appeared willing to overlook NFP as an outlier," said IG Australia's Tony Sycamore.

"However, the equity market is unlikely to be so forgiving if it gets another fright this week from either CPI, the (policy) meeting, or retail sales," he said, referring to the consumer price index.

Stephen Innes at SPI Asset Management said the Fed was walking a fine line.

"On the one hand, there's the concern that they might act too slowly to ease policy, leading to an economic downturn under the strain of higher interest rates, resulting in significant job losses for millions of people," he wrote.

"On the other hand, there's the fear of easing too early, which could result in inflation settling above three percent."

He added: "Hopefully, by the week's end, investors will have some clarity on the Federal Reserve 2024 playbook."

All three main indexes on Wall Street rose Friday but Asian traders struggled to extend the rally, with sentiment jarred by figures showing China slipped further into deflation last month as leaders struggled to kickstart the stuttering economy.

Consumer prices fell at their steepest pace in three years, data showed, fuelling fresh calls for the government to unveil more economic support measures.

"China's deflation situation is deepening with the triple whammy from domestic food prices, international oil price corrections and weak domestic demand," said economists at Citigroup.

"There is no time for policy hesitation to prevent a vicious loop between deflation, confidence and activities."

Still, Shanghai chalked up gains, along with Tokyo, Sydney, Seoul, Taipei and Mumbai, but Hong Kong, Singapore, Wellington, Manila and Jakarta were in retreat.

London fell at the open, while Frankfurt was flat and Paris rose.

The yen fell more than one percent against the dollar on waning expectations the Bank of Japan will shift away from its ultra-loose monetary policy.

The Japanese unit surged to a four-month high in the middle of last week owing to bets on a move after governor Kazuo Ueda said handling monetary policy "will become even more challenging from the year-end and heading into next year".

Talk had been building for an announcement after the BoJ's meeting next week, but reports Monday said officials saw little need to change course just yet.

- Key figures around 0700 GMT -

Tokyo - Nikkei 225: UP 1.5 percent at 32,791.80 (close)

Hong Kong - Hang Seng Index: DOWN 0.8 percent at 16,201.49 (close)

Shanghai - Composite: UP 0.7 percent at 2,991.44 (close)

London - FTSE 100: DOWN 0.1 percent at 7,544.90

Dollar/yen: UP at 146.45 yen from 144.97 yen on Friday

Euro/dollar: DOWN at $1.0753 from $1.0767

Pound/dollar: DOWN at $1.2541 from $1.2550

Euro/pound: UP at 85.78 pence from 85.76 pence

West Texas Intermediate: UP 0.7 percent at $71.70 per barrel

Brent North Sea crude: UP 0.7 percent at $76.36 per barrel

New York - Dow: UP 0.4 percent at 36,247.87 (close)

A.Ammann--VB