SINGAPORE: Asia shares were hesitant on Wednesday after a mixed U.S. jobs reading failed to move the needle on the rate outlook there, leaving investors awaiting further cues to guide their next move.
Oil prices jumped after U.S. President Donald Trump ordered “a total and complete” blockade of all sanctioned oil tankers entering and leaving Venezuela.
U.S. crude futures advanced 1.5% to $56.12 per barrel, while Brent crude futures was up 0.8% to $59.37 a barrel, reversing their steep losses from overnight. Oil prices had slid as the prospect of a Russia-Ukraine peace deal appeared to strengthen, raising expectations that sanctions could be eased.
In the broader market, stocks were off to a cautious start as investors digested Tuesday’s long-awaited U.S. nonfarm payrolls report.
While jobs growth rebounded more than expected in November following its biggest drop in nearly five years in October, the unemployment rate rose to an over four-year high of 4.6% last month.
But there was a lot of noise in the data, which was impacted by the government’s record 43-day shutdown.
“Associated data collection issues will leave many sceptical about reading too deeply into these latest jobs figures,” said Nick Rees, head of macro research at Monex Europe.
“Nevertheless, we still think the overall takeaway remains a sense that the U.S. labour market is softening at a faster rate than policymakers had anticipated, even if there is room to question just how worrying this weakness really is.”
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.16%, while Japan’s Nikkei eased marginally.
Nasdaq futures lost 0.26% and S&P 500 futures eased 0.14%, after a mixed cash session on Wall Street.
Futures suggest markets are still pricing in roughly two U.S. rate cuts next year, with the latest labour market reading doing little to shift those expectations.
The next key data point for investors will be Thursday’s release of the November inflation report.
“For now, our base case remains two 25 bps rate cuts in the first half of next year at the March and June FOMC meetings, with the risks skewed toward more rather than fewer cuts in 2026,” said economists at Wells Fargo in a note.
U.S. Treasury yields were little changed after falling overnight, with the benchmark 10-year yield last at 4.1509%, while the two-year yield stood at 3.4933%.
Cenbank Decisions On Tap
Outside of the United States, investors were also eagerly awaiting policy decisions from the Bank of England (BoE), the European Central Bank (ECB) and the Bank of Japan (BOJ) later in the week.
The BoE is expected to cut rates, while investors are wagering the ECB will stand pat and the BOJ will hike.
That kept moves in currencies largely subdued, though the dollar remained on the back foot.
The euro was up 0.04% at $1.1751, while the yen strengthened 0.1% to 154.60 per dollar.
Sterling was little changed at $1.3422 ahead of British inflation data due later in the day, where a major surprise could make the BoE’s knife-edge vote even more uncertain.
Data on Tuesday showed Britain’s unemployment rate hit its highest since the start of 2021 and private sector pay growth was the weakest in nearly five years in the three months to October.
“What should be more worrisome for the majority of panelists on the BoE’s (Monetary Policy Committee) is that the UK unemployment rate, at 5.1%, is the highest since the beginning of 2021, likely signifying to the majority that there is enough slack in the labour market to point to further easing of inflation in coming months,” said Thierry Wizman, global FX and rates strategist at Macquarie Group.
Elsewhere, spot gold was up 0.35% at $4,318.99 an ounce.
