GLOBAL MARKETS – Asia in cautious mood as Omicron spreads, US CPI looms

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Band Wayne Cole

SYDNEY, December 6 (Reuters)Asian stock markets got off to a cautious start on Monday as Omicron appeared in more countries and investors had to wait a week for key US inflation figures that could set interest rates course.

A mixed U.S. jobs report did little to shake market expectations of more aggressive tightening from the Federal Reserve and Friday’s consumer price report should make the case for more. early reduction.

Omicron remained a concern as the variant spread to about a third of US states, although there were reports from South Africa of cases showing mild symptoms.[[[[

Early trading was slow as MSCI’s broadest index of Asia-Pacific stocks outside Japan .MIAPJ0000PUS down 0.2%.

Japan’s Nikkei .N225 fell 0.7% even as the government considered raising its forecast for economic growth to accommodate a record $490 billion stimulus package.

Wall Street was looking to rally after Friday’s late fall, with S&P 500 futures ESC1 adding 0.4% and Nasdaq futures NQc1 0.1%.

While US payrolls had been disappointing in November, the household survey was much stronger with a jump of 1.1 million jobs, bringing unemployment down to 4.2%.

“We think the Fed will view the economy as much closer to full employment than previously thought,” said Barclays economist Michael Gapen.

“Therefore, we expect an accelerated cut at the December meeting, followed by the first rate hike in March. We continue to expect three 25 basis point hikes in 2022.”

The futures market is almost fully priced up to 0.25% in May and 0.5% in November. FEDWATCH

The hawkish outlook is one reason BofA chief investment strategist Michael Hartnett is bearish on equities for 2022, expecting a “rate shock” and tighter financial conditions.

He favors real assets, real estate, commodities, volatility, cash and emerging markets, while bonds, credit and equities could struggle.

For now, short-term Treasury yields are being pushed higher, but the long-term has rallied as investors bet an earlier start to the rises will mean slower economic growth and inflation. over time and a lower peak for the funds rate. 0#FF:

Ten-year US yields US10YT=RR plunged nearly 13 basis points last week and was last at 1.38%, narrowing the two-year gap to the smallest this year. WE

Rising short-term rates have helped support the US dollar, especially against leveraged growth currencies which are considered vulnerable to the spread of the Omicron variant.

The US dollar hit 13-month highs on the Aussie AUD=D3 and New Zealand dollars USD=D3 but its index was relatively stable on the majors at 96.214 =USD.

The euro was holding at $1.1303 EUR= and above its recent low at $1.1184, while the dollar lost ground against the safe-haven yen at 112.94 JPY=.

Bitcoin lost a fifth of its value on Saturday as profit-taking and macro concerns sparked nearly $1 billion in cryptocurrency sales.

Bitcoin BTC=BTSP last at $49,436, after being as low as $41,967 over the weekend.

In commodities, gold found some support on lower long-term bond yields, but traded sideways for several months in the $1,720/$1,870 range. Early Monday it was steady at $1,783 an ounce XUA=.

Oil prices have been much more volatile, with supply constraints warring against demand concerns as the Omicron spreads. Lately, prices have stopped boiling, with Brent and US crude falling for six straight weeks. WHERE

On Monday, the market was trying to rebound with Brent LCOc1 rising $1.29 to $71.17 a barrel, while U.S. crude CLc1 added $1.30 to $67.56 a barrel.

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(Reporting by Wayne Cole; Editing by Sam Holmes)

((Wayne.Cole@thomsonreuters.com; 612 9171 7144; Reuters Messaging: wayne.cole.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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