SYDNEY (BLOOMBERG) - Stocks looked set for a mixed start on Monday (Oct 11) and United States equity futures fell as traders weighed risks to the pandemic recovery from an energy crunch and the prospect of tighter monetary policy to fight inflation.
Australian shares dropped, while futures slipped for Japan and earlier signaled gains in Hong Kong. S&P 500 and Nasdaq 100 contracts were in the red after the gauges declined on Friday in the wake of US jobs growth data that fell significantly short of expectations while also showing a jump in earnings.
Treasuries retreated after the report, taking the 10-year yield past 1.6 per cent. The wage gains and a jump in energy costs highlight price pressures that are adding to the case for tighter monetary policy. Many strategists expect the Federal Reserve to proceed with a tapering of bond purchases in coming weeks. There is no cash Treasuries trading Monday due to a US holiday.
West Texas Intermediate crude climbed and was trading at around the highest since 2014 at US$79.92 a barrel. New Zealand's dollar was lower amid rising Covid-19 cases there.
In Britain, Bank of England officials moved to reinforce signals of an imminent rise in interest rates to curb inflation. Aside from central bank tightening, investors are also braced for upcoming reports on third-quarter company profits and monitoring the debt woes and slowdown in China's property sector.
"The tapering is very much on track for November," Mr Simon Ballard, First Abu Dhabi Bank chief economist, said on Bloomberg Television. In terms of Fed rate hikes, the jobs report puts the "focus on later rather than sooner".
Goldman Sachs Group economists cut their forecasts for US growth this year and next, blaming a delayed recovery in consumer spending. The declines were mostly offset by upgrades to projections for the following two years.
Elsewhere, tension over Taiwan is simmering. President Tsai Ing-Wen said the island is facing "unprecedented challenges" and will defend its sovereignty, pushing back after Chinese leader Xi Jinping declared a day earlier that unification will be achieved. Taiwan's markets are closed for a holiday.
In cryptocurrencies, Bitcoin edged down to trade around US$55,000.
Gold was at US$1,754.90 an ounce.