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Global Markets: Asia shares struggle to rally, oil skids further

Reuters  |  SYDNEY 

By Wayne Cole

SYDNEY (Reuters) - Asian shares fought to sustain the slimmest of recoveries on Friday amid speculation the Federal Reserve might be "one-and-done" with U.S. rate hikes, while fell anew as producers bickered over the details of an output cut.

MSCI's broadest index of shares outside nudged up 0.4 percent, though that followed a 1.8 percent drubbing on Thursday. Japan's Nikkei added 0.8 percent.

Chinese shares, which were up earlier in the day, slipped into negative territory with the blue chips off 0.1 percent. E-Mini futures for the S&P 500 too started firmer but were last down 0.1 percent.

Spreadbetters, however, pointed to a strong start for with London's FTSE futures up 1.8 percent.

There was no escaping concerns over Sino-U.S. relations after the arrest of maker 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.

Federal Reserve 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 price," said National

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

The mood in risk-asset markets 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 hiking rates given concerns about global growth and the disinflationary impact of collapsing prices.

Interest rate futures 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 steep losses and the Dow ended Thursday down 0.32 percent, while the S&P 500 lost 0.15 percent. The Nasdaq managed to advance 0.42 percent.


Treasuries extended their blistering rally, driving 10-year yields down to a three-month trough at 2.8260 percent, before last trading at 2.89 percent.

Yields on two-year notes fell a huge 10 basis points at one stage on Thursday and were last at 2.76 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 96.803, and fell to 112.85 yen from a 113.85 high at the start of the week. The euro was up around 0.4 percent on the week so far at $1.1366.

Crptocurrency Bitcoin took a fresh spill to be down almost 18 percent for the week at $3,363.37.

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 $1,239 per ounce.

Oil was less favoured, however, falling further as delayed a decision on output cuts while awaiting support from non-heavyweight

Brent futures slipped 52 cents to $59.54 a barrel, while U.S. crude lost 40 cents to $51.09.

(Additional reporting by Swati Pandey; Editing by & Shri Navaratnam)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Fri, December 07 2018. 12:09 IST