Asia shares off 7month peak, mood turns cautious

SYDNEY: Asian shares briefly brushed seven-month peaks yesterday as investors cheered a rebound in US payrolls and hints of more stimulus in China, but caution soon surfaced ahead of what is likely to be a tough US earnings season.

In a document published on the central government’s website late on Sunday, Beijing said it would step up a policy of targeted cuts to banks’ required reserve ratios to encourage financing for small and medium-sized businesses.

Chinese blue chips initially climbed to territory not visited since March last year, only to fade 1 per cent as the session wore on.

MSCI’s broadest index of AsiaPacific shares outside Japan went flat having reached its highest since August.

Japan’s Nikkei was off 0.1 per cent after reaching its high of the year so far.

E-Mini futures for the S& P 500 eased 0.2 per cent and futures pointed to a soft start for the major European bourses.

On Wall Street, the benchmark S& P 500 had closed higher for its seventh trading day in a row last week, the longest winning streak since October 2017.

However, a test looms as major US banks kick off what analysts expect to be the first quarter of contracting corporate earnings since 2016.

JPMorgan Chase & Co and Wells Fargo & Co will get the ball rolling on Friday.

Before that, minutes of the Federal Reserve’s last policy meeting are due out on Wednesday.

“Markets will be looking at just how dovish the FOMC has become,” wrote analysts at TD Securities in a note.

“We put a very low but not zero chance on a rate cut discussion; conversely rate hikes are still on the horizon for the majority of Fed officials.”

“The minutes are likely to show peak dovishness in terms of nervousness about the outlook.” — Reuters