HONG KONG: Asian markets mostly rose Tuesday after a rally on Wall Street as traders try to assess the outlook for US interest rates following last week's disappointing jobs report, with focus on the release of key inflation data.
With Friday's non-farm payrolls showing the labour market slowing faster than expected, there is a growing worry that the world's top economy is heading for a recession, which sent stocks tumbling.
The Federal Reserve is widely seen cutting rates at next week's meeting but debate surrounds whether it will be 25 or 50 basis points, with some arguing that going for the bigger option could suggest decision-makers are worried.
Analyst Stephen Innes said there were numerous factors that could sway nervous investors ahead of the Fed's decision.
Wednesday's consumer price index is the first major release and a big miss to the downside could ramp up bets on a 50-point cut but add to concerns about the economy.
"While the labour market is cooling, it's far from frozen, and second-quarter GDP was revised up to a solid 3.0 percent annualised gain, keeping the soft-landing narrative firmly on the table," he wrote in his Dark Side Of The Boom newsletter.
Still, he added: "For now, the Fed likely won't feel the need to hit the panic button with a jumbo rate cut, but stock traders... haven't fully grasped the depth of the potential labour market weakness yet.
"That leaves the door open for further, potentially sizeable market corrections. Expect the worry meter to creep higher if the employment picture deteriorates further."
All three main indexes on Wall Street rose more than one percent Monday after Friday's steep, tech-led retreat.
Hong Kong, Shanghai, Sydney, Singapore, Wellington, Manila, Mumbai and Jakarta edged up but Tokyo, Seoul, Taipei and Bangkok dipped.
London, Paris and Frankfurt were all down in early trade.
Fresh worries about China's economy are also dampening sentiment, with a mixed bag on trade doing little to encourage investors.
Data showed exports jumped in August but imports fell well short of expectations as the country's leaders struggle to boost consumption.
That came a day after news that inflation rose less than expected in July, reinforcing the view that moves to boost consumer demand and business activity have not taken hold.
China's leaders are now facing pressure to unveil fresh stimulus for the world's number two economy, although they have shown little desire to embark on the bazooka-like spending seen during the global financial crisis.
On currency markets, the dollar strengthened against the yen but the euro edged up ahead of an expected rate cut by the European Central Bank on Thursday.
