SYDNEY: Asian shares struggled with a slide in South Korea on Monday ahead of a packed week of central bank meetings that should see borrowing costs take a step lower, while U.S. inflation data are the last hurdle to a further policy easing there.
Chinese figures out on Monday showed the consumer price index fell a surprisingly large 0.6 per cent in November, pulling annual inflation down to just 0.2 per cent and underlining the need for more drastic policy stimulus.
Beijing's Central Economic Work Conference, where policymakers are expected to chart the course for the country's economy in 2025, is also scheduled for this week, though markets are not sure if any new policies will be announced.
Political tumult in France and South Korea was joined by the fall of Syrian President Bashar al-Assad's regime, which complicated an already fraught situation in the Middle East.
Still, the mood was generally upbeat after U.S. November payrolls showed enough of a recovery to assuage concerns of a slowdown, but not so much as to forestall a rate cut from the Federal Reserve next week.
The U.S. consumer price report is out Wednesday and the core is seen holding at 3.3 per cent for November, which should be no impediment to an easing.
"Incoming data support our call for global growth lift into year-end, despite a slipping Euro area and building political stress," said Bruce Kasman, head of economic research at JPMorgan.
"We expect policy rates in Canada, Euro area, and Sweden to drop to 2 per cent or lower over the coming year, while US and UK rates settle close to 4 per cent," he added. "This month's meetings should point in this direction."
Futures imply an 85 per cent chance on a quarter-point easing at the Fed's Dec. 17-18 meeting, up from 68 per cent ahead of the jobs figures, and have a further three cuts priced in for next year.
That outlook combined with the bull run in tech stocks to boost the Nasdaq market by over US$1 trillion in value last week alone. On Monday, S&P 500 futures and Nasdaq futures were both little changed.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.2 per cent. South Korean stocks fell 1.4 per cent even as authorities pledged all-out efforts to stabilise financial markets amid uncertainty over the fate of President Yoon Suk Yeol. The dollar added 0.5 per cent on the won to 1,430.87 , nearing last week's peak of 1,443.40.
Japan's Nikkei firmed 0.3 per cent, helped by an upward revision to economic growth, while Chinese blue chips wavered either side of flat.
CENTRAL BANKS GALORE
Among the many policy meetings this week, the European Central Bank is fully expected to cut by 25 basis points on Thursday, with a one-in-five chance of 50 basis points.
"With geopolitical uncertainty high and conflicting signals from hard and soft data, monetary policy remains the only game in town to support economic activity, especially in the absence of strong political leadership in Paris and Berlin," said Barclays economist Christian Keller.
"We continue to expect consecutive 25bp cuts until June next year, and then cuts in September and December to reach a terminal rate of 1.5 per cent."
Markets are leaning toward a half-point cut from the Swiss National Bank on Thursday given slowing inflation and a desire to stop the franc reaching record highs on the euro.
Canada's central bank is now expected to ease by a half point on Wednesday following a shock rise in unemployment for November.
The Reserve Bank of Australia holds its meeting on Tuesday and is one of the few seen standing pat, while Brazil's central bank is set to hike again to contain inflation.
In currency markets, the dollar index was flat at 106.010 after edging up 0.2 per cent last week. The euro stood at US$1.0557 , having bounced as high as US$1.0629 on Friday before the job figures boosted the dollar broadly.
The dollar dipped 0.1% on the yen to 149.80, having held to a 148.65 to 151.23 range last week as investors await further guidance on the prospect of a near-term rate hike from the Bank of Japan.
Geopolitical uncertainty helped gold edge up 0.6 per cent to US$2,648 an ounce, but it faces resistance at US$2,666.
Oil prices gained some support from events in the Middle East, though markets are preoccupied with the risk of weak demand, particularly from China.
Brent added 25 cents to US$71.35 a barrel, while U.S. crude rose 24 cents to US$67.44 per barrel.