Asian stock markets were cautious on Monday after a mixed U.S. jobs report fueled a rally in beaten-down bonds, but new hurdles lie ahead in the form of upcoming U.S. and Chinese inflation data.
MSCI's broadest index of Asia-Pacific shares outside Japan ticked down in thin trade, following a 2.3% loss last week. Japan's Nikkei turned flat after finding support at its July low.
Chinese blue chips eased 0.9% as investors remained disappointed by the lack of major stimulus steps from Beijing. EUROSTOXX 50 futures dipped 0.3% and FTSE futures 0.5%.
With over 90% of S&P 500 earnings reported, results are 4% above consensus estimates. Data on U.S. consumer prices is forecast to show core inflation slowing to 4.7% but headline inflation rising to 3.3%.
The market is looking for further signs of deflation in China, with consumer prices seen falling 0.5% and producer prices down 4%. Any upside surprises would test recently rallied Treasuries.
Futures imply only a 12% chance of a Fed rate hike in September, underscoring how the bond rally has tempered rate hike expectations. The dollar was slightly firmer while gold held its gains. Oil prices paused after rallying for six straight weeks on tightening supply.
