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Battered Asia shares try to rally on talk of Fed pause

Reuters  |  SYDNEY 

By Wayne Cole

SYDNEY (Reuters) - Asian share markets tried to find their footing on Friday as speculation the Federal Reserve might be "one-and-done" with U.S. rate hikes helped salve some wounds after a punishing week.

MSCI's broadest index of shares outside <.MIAPJ0000PUS> nudged up 0.l3 percent, though that followed a 1.8 percent drubbing on Thursday.

Japan's Nikkei <.N225> added 0.9 percent and E-Mini futures for the S&P 500 edged up 0.1 percent.

Concerns over Sino-U.S. relations remain heightened after the arrest of maker Meng Wanzhou, which threatened to chill talks on some form of trade truce.

Markets also face a test from U.S. payrolls data later in the session amid speculation the was heading for a tough patch after years of solid growth.

Fed emphasised the strength of the labour market in remarks made late Thursday.

Economists polled by forecast jobs rose by 200,000 in November after surging 250,000 in October.

"A view has developed of U.S. growth normalising a little faster than expected from the fiscal 'sugar rush', while inflationary pressures remain contained given the sharp fall in the oil price," said National

"Payrolls will be very important in helping to validate whether the is indeed slowing faster than expected."

The mood brightened a little after reported Fed officials are considering whether to signal a new wait-and-see mentality after a likely rate increase at their meeting in December.

That only added to recent feverish speculation the central was almost done on hiking rates given concerns on global growth and the disinflationary impact of collapsing

Interest rate futures <0#FF:> rallied hard in massive volumes with the market now pricing in less than one hike next year. A month ago they had been wagering on three increases.

The helped Wall Street pare early steep losses and the Dow <.DJI> ended 0.32 percent lower, while the S&P 500 <.SPX> lost 0.15 percent. The Nasdaq <.IXIC> even added 0.42 percent.

FLATTENED

Treasuries extended their blistering rally, driving 10-year yields down to a three-month trough at 2.8260 percent, before last trading at 2.8973 percent .

Yields on two-year notes fell a huge 10 basis points at one stage on Thursday and were last at 2.77 percent.

Investors also steamrolled the to its flattest in over a decade, a trend that has historically presaged economic slowdowns and even recessions.

"The sort of flattening of the that we have seen recently usually indicates that investors think the Fed is nearing the end of a tightening cycle, and that rate cuts may even be on the horizon," argued analysts at

The seismic shock spread far and wide. Yields on 10-year paper sank to the lowest in six months in Germany, almost 12 months in and 16 months in

The sea change in expectations took a toll on the U.S. dollar as bulls had been counting heavily on a steady widening rate differential to propel the currency.

The greenback eased against a basket of currencies to 96.779 <.DXY>, and fell to 112.69 yen from a 113.85 high at the start of the week. The euro was up around 0.5 percent on the week so far at $1.1376 .

Cyber currency Bitcoin took another spill, sliding more than 6 percent to $3,446.17 .

In commodity markets, gold firmed to near a five-month peak as the dollar eased and the threat of higher interest rates waned. Spot gold stood at $1,237.61 per ounce.

Oil was less favoured, however, falling nearly 3 percent on Thursday after and its allies ended a meeting without announcing a decision to cut crude output.

had tentatively agreed to cut output but was waiting for a commitment from non-heavyweight before deciding volumes. [O/R]

Brent futures had ended with a loss of $1.21 at $60.67 a barrel. U.S. crude edged up 6 cents in early trade Friday to $51.55, having lost $1.31 overnight.

Graphic: Asian stock markets (https://tmsnrt.rs/2zpUAr4)

(Editing by Sam Holmes)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, December 07 2018. 06:02 IST
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