Asia shares bounce, others cautious as oil rises

By Wayne Cole SYDNEY, Sept 7 (Reuters) - Asian shares rallied on Monday as the robust U.S. jobs report was seen as positive for global growth even as it narrowed the odds on a rise in interest rates. Meanwhile, oil prices rose after the U.S. and Iran attacked ships in the Gulf. Tehran announced plans to create a restricted zone outside the Strait of Hormuz.

As a result, Brent crude increased by 0.2% to $96.45 a barrel, while U.S. crude rose 0.4% to $91.85 a barrel. This rise in oil prices adds to inflationary pressures, increasing the stakes for a key U.S. consumer prices report this week. The European Central Bank is expected to raise rates to 2.75% on Thursday, with futures indicating a 75% chance of another hike to 3.0% by December.

European stocks remained cautious due to potential hawkish guidance from the ECB. On Wall Street, a U.S. holiday kept trading light, with S&P 500 and Nasdaq futures slightly lower. In Asia, Japan's Nikkei rebounded 2.0%, and South Korea rallied 3.0%.

MSCI's broadest Asia-Pacific index outside Japan added 0.9%. Rising bond yields are a drag on equity valuations, with Treasury 10-year yields near 4.7840%, a high since late 2023. A strong CPI reading could push yields closer to the 5.0% barrier.

The U.S. August CPI report on Friday is expected to show a 0.2% rise in core inflation, with a risk of 0.3%. The Federal Reserve is pricing a 58% chance of a hike at its September 16 meeting and a 70% chance in October.

Bruce Kasman of JPMorgan expects core CPI to rise by 0.21%, keeping the Fed on hold for now. Markets also see a 75% chance of the Bank of Japan raising rates by a quarter point at its September 18 meeting, with another move by December. Kasman notes that central bank patience through the energy shock has supported asset prices but warns of an impending shift.

The dollar index saw only a mild lift from the jobs report, while the euro held steady near $1.1614. Gold remained steady at $4,426 an ounce, finding support at $4,282 last week.

Source: Euronext Markets: Real-time Stock Market Data | live