Asia tech shares rally, others hesitate as oil climbs

By Wayne Cole

SYDNEY, Sept 7 (Reuters) - Asian tech 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, while oil edged higher after the U.S. and Iran attacked ships in the Gulf.

Tehran said it will announce a restricted zone outside the Strait of Hormuz in coming days, after U.S. forces hit three Iranian tankers and Iran's Islamic Revolutionary Guard Corps launched ballistic missiles at two U.S. Navy ships.

As a result, Brent climbed 1.1% to reach $97.37 a barrel, having surged almost 8% last week, while U.S. crude rose 1.2% to $92.57 a barrel.

That is not good news for diesel prices, which hit record highs last week. Diesel is the fuel that matters most for transport, shipping, farming and manufacturing.

That inflationary impulse raises the stakes for a key reading of U.S. consumer prices this week, and is a major reason the European Central Bank is seen as certain to lift rates to 2.75% on Thursday. Futures also imply a 75% chance of another hike to 3.0% by December.     

The risk of hawkish guidance from the ECB after the rate hike is likely to keep European stocks on edge on Monday. EUROSTOXX 50 futures, DAX futures and FTSE futures were all down 0.1%.

On Wall Street, a U.S. holiday kept turnover light with both S&P 500 futures off 0.1% and Nasdaq futures up 0.1%.

A key focus this week is the U.S. August CPI report on Friday where median forecasts are for a rise of 0.2% in the core, with a risk of 0.3%.

In Asia, enthusiasm for tech stocks saw Japan's Nikkei rebound 2.0%, after losing a similar amount last week, while South Korea rallied 4.3%. 

Some traders pointed to an uber-bullish outlook from Goldman Sachs predicting a further 75% rise in the Kospi to 12,000, though that has been a long-standing call.

Chinese blue chips added 0.2%, with some relief that China's finance ministry will lead a combined $54 billion capital injection into state-owned insurers and banks.

MSCI's broadest index of Asia-Pacific shares outside Japan climbed 1.5%. 

Rising bond yields remain a drag for equity valuations, with Treasury 10-year yields near their highest since late 2023 at 4.7840%. A high CPI reading would likely see yields edge closer to the psychological 5.0% barrier.

For the Federal Reserve, last week's upbeat payrolls report has left markets pricing a 58% chance of a hike when it meets on September 16, and 70% for a move in October.

CENTRAL BANKS 'ON THE MOVE'

Bruce Kasman, global head of economics at JPMorgan, is looking for core CPI to rise 0.21% which he thinks would be low enough to keep the Fed on hold, if only for now.

Likewise, markets are pricing in a 75% chance the Bank of Japan will raise rates a quarter point at its meeting on September 18, with a 60% probability of another move by December. 

"Central bank patience through the energy shock has been supportive of asset prices and the credit cycle," said Kasman. "However, central banks are now on the move." 

"We forecast two more hikes from the ECB and BoJ before year-end," he added. "There is also a strong case for the Fed to move earlier and more aggressively than our baseline forecast for a December hike."

In currency markets, the dollar index got only a mild lift from the jobs report as worries about ever-growing U.S. debt and policy uncertainties erode the purchasing power of the currency.

President Donald Trump caused a stir on Friday when he warned he would cease international trade with countries running a trade surplus with the United States if the Fed did not slash interest rates as he wanted.

The dollar index stood at 99.135, not far from recent lows of 98.558. The euro held at $1.1610, within sight of the August top of $1.1711.

The single currency had political troubles of its own as the far-right Alternative for Germany (AfD) surged into first place in state elections in Saxony-Anhalt on Sunday, though it was still short of a majority.

The dollar was a tick easier at 156.04 yen, and still threatening major support at 155.00 after losing 2.4% last week as the yen rallied on speculation about a more aggressive BoJ tightening.

In commodities, gold slipped 0.3% to $4,411 an ounce, after finding support at $4,282 last week. [GOL/] 

(Reporting by Wayne Cole; Editing by Muralikumar Anantharaman and Stephen Coates)