Shares find support in Asia as lower rates priced in
A buy-the-dip mentality led to a bounce in Wall Street and European stock futures, and allowed the dollar to stabilise after Friday's payrolls-induced retreat.
Treasuries ran into some profit-taking after their huge gains but fund futures still imply an 85 per cent chance the Federal Reserve will cut rates in September, and ease by 100 basis points or more by this time next year.
The prospect of a shift in rates was the only silver lining to a dire payrolls report in which downward revisions left the three-month average of jobs growth at 35,000 from 231,000 at the start of the year.
"The report brings payroll growth closer in line with big data indicators of job gains and the broader growth dataset, both of which have slowed significantly in recent months," said analysts at Goldman Sachs.
"Taken together, the economic data confirm our view that the U.S. economy is growing at a below-potential pace."
Neither did the reaction of President Donald Trump instil confidence, as the firing of the head of Labor Statistics threatened the credibility of U.S. economic data.
Likewise, news that Trump would get to fill a governorship position at the Federal Reserve early added to worries about the politicisation of interest rate policy.
Analysts assume the appointee will be loyal to Trump alone, though the president did grudgingly concede that Fed Chair Jerome Powell would probably see out his term.
"It opens the prospect of broader support on the Fed Board for lower rates sooner rather than later," said Ray Attrill, head of FX research at NAB.
"Fed credibility, and the veracity of the statistics on which they base their policy decisions, are both now under the spotlight."
Markets have essentially already eased for the Fed, with two-year Treasury yields down almost 25 basis points on Friday in the biggest one-day drop since August last year.
DOLLAR DENTED
The drop in global yields seemed to help equities, with S&P 500 futures and Nasdaq futures both bouncing 0.4 per cent. EUROSTOXX 50 futures gained 0.6 per cent, while FTSE futures rose 0.5 per cent and DAX futures 0.4 per cent.
MSCI's broadest index of Asia-Pacific shares outside Japan firmed 0.6 per cent, aided by a 0.8 per cent rally in South Korea stocks.
Japan's Nikkei fell 1.6 per cent, in part weighed by Friday's rebound in the yen, while Chinese blue chips were flat.
Wall Street has taken comfort in an upbeat results season. About two-thirds of the S&P 500 have reported and 63 per cent have beaten forecasts. Earnings growth is estimated at 9.8 per cent, up from 5.8 per cent at the start of July.
Companies reporting this week include Disney, McDonald's, Caterpillar and some of the large pharmaceutical groups.
The dismal U.S. jobs data did put a dent in the dollar's crown of exceptionalism, snuffing out what had been a promising rally for the currency.
The dollar was a shade firmer at 147.69 yen, having shed an eye-watering 2.3 per cent on Friday, while the euro held steady at $1.1583 after bouncing 1.5 per cent on Friday.
The dollar index was pinned at 98.727, having been toppled from last week's top of 100.250.
Sterling was restrained at $1.3282 as markets are 87 per cent priced for the Bank of England to cut rates by a quarter point at a meeting on Thursday.
The BoE board itself is expected to remain split on easing, while markets still favour two further cuts by the middle of next year.
In commodity markets, gold was flat at $3,361 an ounce, having climbed more than 2 per cent on Friday.
Oil prices extended their latest slide as OPEC+ agreed to another large rise in output for September, which completely reverses last year's cuts of 2.2 million barrels per day.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CNA
27 minutes ago
- CNA
Commentary: Need a prata or a Ferrari? There are vending machines for that
SINGAPORE: Walk through any MRT station, mall, or even hospital in Singapore today and chances are, you'll see a vending machine or three. What used to be a niche fixture for drinks, potato chips and candy bars has evolved into a retail model in its own right. Banana cake from Johor Bahru's Hiap Joo, Mao Shan Wang durians from Kaki Kaki and even hot roti prata with curry from Springleaf Prata Place are now available on-demand, 24/7, while stocks last. There's no store, no staff, just a digital interface and a glass window. So, what's behind this rise? Is this temporary, or the future of retail? According to data analytics firm Euromonitor International, Singapore recorded S$117 million (US$90 million) in vending machine sales last year, up from S$100 million in 2019. The figure is projected to reach S$124 million by end-2025. Globally, consultancy firm Precedence Research forecasts that the vending machine market size could grow to US$45 billion by 2034 from an estimated US$23 billion this year. From those numbers, it is clear vending machines are becoming commercially viable and entrenched in our daily lives. WHY VENDING MACHINES ARE GAINING TRACTION Part of their appeal lies in their high efficiency and low cost. In a city known for higher rents, vending machines offer brands a cost-effective way to reach consumers without the overhead of a full retail operation. There are no staff to schedule, no point-of-sale systems to maintain and no need to lock up at the end of the day. A single machine in a busy location can generate steady revenue with minimal manpower. Vending machines are also cost-effective for testing new markets or maintaining a presence in high-traffic areas. Second, they align with Singapore's appetite for round-the-clock convenience. In a country where internet banking, online grocery shopping and QR code payments are part of daily life, Singaporeans are no strangers to the self-service model. Vending machines – which are always on, always stocked (ideally) and increasingly able to serve niche needs – now dispense everything from flowers, clothes, laundry detergent and even luxury cars. There are also vending machines that allow you to see a doctor, get a medical certificate and medication. And then, there is the fandom factor. PopMart and Labubu-style machines, for example, sell 'blind-box' items with the appeal of collectible surprise. Like Japan's gachapon machines, they play on mystery, expectation and the thrill of possibility, turning what would otherwise be a simple purchase into an entire experience. ARE WE HEADED TOWARD A VENDING-ONLY FUTURE? Still, while vending machines are clearly gaining ground, it's unlikely they will replace physical shops anytime soon. Product fit is a consideration. Some products do not lend themselves to the vending application. For example, fresh food has a limited shelf life, and delicate items like make-up can be damaged during dispensing. While vending machines work well for sealed snacks, drinks, collectibles and pre-packed meals, they fall short for things that require human interaction, education or guidance. Even with advances in artificial intelligence and personalised interfaces, some elements of the retail experience remain distinctly human and irreplaceable. Some products require customer education before purchase. For example, skincare, health supplements, tech gadgets and baby products often need guidance or clarification about ingredients, side effects or compatibility. In these cases, customers usually prefer face-to-face engagement to ask questions and clarify doubts. These are things that a vending machine cannot do - yet. Moreover, vending machines offer reach, but not depth. A brand can distribute its product but can't build a community or tell its story like a well-designed pop-up or store. For start-ups or lifestyle brands, physical touchpoints remain key to building trust and identity. POTENTIAL PITFALLS TO WATCH Although vending machines are less expensive than brick-and-mortar stores, they still require significant upfront capital. A new vending machine can cost between S$5,000 and S$10,000. For those who lease the machines instead, rental rates can cost up to S$800 a month. There are also expenses for hardware, licensing, software, maintenance and the logistics needed for regular replenishment, not to mention losses from wear and tear, technical issues or vandalism. Customer support is also an issue. When things go wrong, be it a jammed dispenser or a failed payment, there's no staff on-site to fix the issue. Without a way to resolve issues instantly, instant recourse, brand loyalty can suffer. A case in point: Amazon Dash Buttons. Designed to simplify reordering household products, they were discontinued after users found them unintuitive, lacked feedback mechanisms, and caused accidental orders. Another example is Stockwell (formerly known as Bodega). The AI vending machine, founded in 2017 by former Google employees, installed smart vending machines in offices and apartment lobbies in the United States, aiming to replace convenience stores. According to TechCrunch reports, Stockwell was unable to find a sustainable or scalable model for its vending machines, despite raising over US$45 million. They ultimately decided to shut down operations in 2020. A HYBRID FUTURE For all their efficiency, vending machines are not the future of retail. They are, instead, part of its evolution. Vending machines will become one of many tools in a brand's playbook. For instance, a bakery might use them to sell bestsellers after hours. A cosmetics brand might place machines in MRT stations to distribute limited-edition samples and drive buzz. A supermarket might offload fast-moving items to vending machines nearby, while staff focus on higher-value interactions. Healthcare providers could deploy machines in remote areas to improve medication access and continuity of care. More broadly, vending machines reflect a bigger trend: retail unbundling. Just as entertainment moved from free-to-air TV to cable to Netflix and TikTok clips, retail is being broken down into moments. Rather than competing with vending machines, stores may evolve into experience hubs where customers can explore, sample and benefit from the kind of personalised service only people can provide. You don't need a storefront to sell. But if you want to build a brand, tell a story or win loyalty, you still need more than a machine.
CNA
an hour ago
- CNA
Trump says US will charge tariff of about 100% on semiconductor imports
WASHINGTON :The United States will impose a tariff of about 100 per cent on semiconductor chips imported into the country, President Donald Trump said on Wednesday. Trump told reporters in the Oval Office that the new tariff rate would apply to "all chips and semiconductors coming into the United States," but would not apply to companies that had made a commitment to manufacture in the United States. "So 100 per cent tariff on all chips and semiconductors coming into the United States. But if you've made a commitment to build (in the U.S.), or if you're in the process of building (in the U.S.), as many are, there is no tariff," Trump said.
Straits Times
an hour ago
- Straits Times
US stocks rise as Apple surges
Sign up now: Get ST's newsletters delivered to your inbox Traders working on the floor of the New York Stock Exchange, in New York City, on Aug 6. NEW YORK - Wall Street stocks rose on Aug 6 with Apple and most other large tech companies rallying as markets largely shrugged off US President Donald Trump's latest tariff hikes. Apple piled on more than 5 per cent after White House officials said the tech giant plans an additional US$100 billion (S$129 billion) in capital spending in the United States. Amazon and Google parent Alphabet were among the other large tech names that also rose. 'By standing up and publicly announcing a domestic investment with President Trump, it reduces the likelihood of Trump imposing new tariff burdens on Apple,' said FHN Financial's Chris Low. The Dow Jones Industrial Average finished up 0.2 per cent at 44,193.12. The broad-based S&P 500 gained 0.7 per cent to 6,345.06, while the tech-rich Nasdaq Composite Index climbed 1.2 per cent to 21,169.42, less than 10 points from an all-time record. Mr Trump ordered an additional 25 per cent tariff on Indian goods. The levy, which is expected to come into force in three weeks, is due to New Delhi's continued purchase of Russian oil. A new wave of Trump tariffs is due to take effect on Aug 7 on dozens of other economies. But the Aug 6 gains suggest investors are becoming more inured to the levies. 'This is a market that's fuelled by enthusiasm,' said Mr Jack Ablin, of Cresset Capital Management. 'Nothing has blown up yet. Perhaps the impact of tariffs won't be as great as investors originally feared.' Among individual companies, Disney fell 2.7 per cent as it reported around a doubling of profits to US$5.3 billion and announced a series of new deals to boost its upcoming ESPN streaming venture. But McDonald's jumped 3 per cent as it reported an 11 per cent rise in profits to US$2.3 billion. While the fast food giant returned to sales growth at US stores, it warned that low-income consumers were cutting back amid financial pressures. AFP
