Asian stocks are expected to open higher on Monday, with futures for Japan and South Korea pointing to gains. Australian futures remained steady. This follows a mixed performance on Friday for US stocks, where the S&P 500 fell 0.4%, but the tech-heavy Nasdaq 100 advanced 0.2%. The dollar traded within a narrow range against major currencies, and cash trading in Treasuries is closed for a US public holiday.
Oil prices edged higher due to renewed concerns that escalating tensions between the US and Iran, following weekend attacks, could disrupt crude supplies and contribute to inflation. Brent crude climbed 0.4%, and West Texas Intermediate crude rose 0.3% to $91.80 a barrel. The ongoing conflict in the Middle East, now more than six months old, suggests little immediate prospect of resolution, further adding to inflation worries. This places significant focus on the upcoming US inflation data, scheduled for release this Friday, especially after stronger-than-expected US payroll numbers last week increased the likelihood of a Federal Reserve interest rate hike this month.
Elias Haddad, global head of markets strategy at Brown Brothers Harriman, stated that a September 16 Fed funds rate hike is contingent on Friday's US August CPI print. A strong CPI reading would likely confirm a September hike and strengthen the US dollar, while a cooler reading would support a decision to hold rates and leave the dollar vulnerable to a dovish repricing. In corporate news, Hon Hai Precision Industry Co., a server assembly partner for Nvidia Corp., reported a 52% increase in monthly sales, driven by demand for servers amid the race to build data centers and AI capacity. Hon Hai's sales are closely monitored as an indicator of AI spending, given growing concerns about overcapacity, rising debt, and increasing competition.
