Asian shares struggled to stay positive on Tuesday after downbeat economic data pressured Wall Street ahead of a key U.S. jobs report that could provide important clues to the timing of the Federal Reserve's interest rate increase.
Asian shares struggled to stay positive on Tuesday after downbeat economic data pressured Wall Street ahead of a key U.S. jobs report that could provide important clues to the timing of the Federal Reserve’s interest rate increase.
Crude oil prices firmed after plunging overnight, with U.S. crude adding about 0.7 percent to $45.48 a barrel. Brent gained 0.7 percent to $49.84 after skidding 5 percent to six-month lows.
MSCI’s broadest index of Asia-Pacific shares outside Japan was slightly lower, while Japan’s Nikkei stock index slipped 0.1 percent, after breaking a three-day winning streak in the previous session.
China stocks were higher in early trade, with the Shanghai Composite Index and the CSI300 index both firmer. Beijing has taken a raft of steps to support Chinese share markets after they lost more than 30 percent of their value since peaking in June.
U.S. equities markets stumbled overnight, after manufacturing data from China and the U.S. both disappointed.
The Institute for Supply Management’s index of national factory activity slipped to 52.7 in July, falling short of expectations that it would match last month’s reading of 53.5.
The weak reading, and fears of disinflation stemming from the rout in oil prices, led investors to pare bets that the Fed’s long-awaited interest rate hike will come as early as September.
Friday’s employment data is expected to show the U.S. economy created 225,000 new jobs in July, according to economists polled by Reuters. The unemployment rate is expected to hold steady at 5.3 percent.
“If we get some certainty about the strength of the U.S. economy and the likelihood of policy normalization by the Fed, and if a rate hike seems justifiable, that is positive for sentiment for global risk-on because a lot of people have been bracing for this,” said Stefan Worrall, director of cash equities at Credit Suisse.
The dollar edged up against its Japanese counterpart to 127.07 yen, while the euro was slightly lower at $1.0947 .
Commodity currencies stabilized after facing pressure from crude oil’s tumble.
The Canadian dollar was nearly flat on the day, though it edged down earlier to notch a fresh 11-year low of C$1.3176 per U.S. dollar. Canadian markets will reopen on Tuesday after they were shut for a public holiday on Monday.
The Australian dollar last traded at $0.7288, up slightly on the day and holding above last week’s six-year low of $0.7234 as investors awaited the outcome of the Reserve Bank of Australia’s policy meeting at 0430 GMT.
Market participants widely expect the RBA to leave the cash rate unchanged at a record low 2.0 percent, but it could try to talk down the currency.
The Aussie got some support from Australian retail sales data, which showed a better-than-expected 0.7 percent rise in June, beating expectations of 0.5 percent growth.
Spot gold was down about 0.2 percent at 1,083.70 per ounce, dropping for a third session in four with a 5-1/2-year low in sight, as expectations that the Fed is set to raise interest rates this year undermined the precious metal.