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Asian stock markets : https://tmsnrt.rs/2zpUAr4

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Nikkei slips as yen climbs, Wall St futures dither

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Markets imply 38% chance Fed cuts by 50bps

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Oil gains as Israel and Hezbollah trade blows

(Updates prices)

By Wayne Cole

SYDNEY, Aug 26 (Reuters) - Major share markets turned

hesitant in Asia on Monday, while the dollar and bond yields

were on the wane ahead of inflation data that investors hope

will pave the way for rate cuts in the United States and Europe.

Oil prices climbed 0.7% after Israel and Hezbollah traded

rocket salvos and air strikes on Sunday, stirring worries about

possible supply disruptions if the conflict escalated.

Brent rose 51 cents to $79.52 a barrel, while U.S.

crude added 50 cents to $75.33 per barrel.

Investors are also anxiously awaiting earnings from AI

darling Nvidia ( NVDA ) on Wednesday to see if it can match the

market's uber-high expectations.

The stock is up some 150% year-to-date, accounting for

around a quarter of the S&P 500's 17% year-to-date gain.

"Nvidia ( NVDA ) will beat consensus expectations, they always do,

but investors are so ingrained in seeing revenue come in $2

billion plus above the analysts' consensus or we could easily

see a sell the news event," said Chris Weston, head of research

at broker Pepperstone.

That means Nvidia ( NVDA ) would have to report sales of $30 billion

or more and guidance for the third quarter of $33 billion or

above, he added.

On Monday, S&P 500 futures and Nasdaq futures

were both near flat in slow trade.

EUROSTOXX 50 futures dipped 0.3%, while FTSE

futures were closed for a holiday.

MSCI's broadest index of Asia-Pacific shares outside Japan

added 0.6%, after rising 1.1% last week, while

South Korea fell 0.2%. Chinese blue chips lost

0.4%.

Japan's Nikkei fell 0.8% as a stronger yen pressured

exporter stocks.

The yen has jumped on a broadly weaker dollar after Federal

Reserve Chair Jerome Powell said the time had come to start

easing policy and emphasised the central bank did not want to

see further weakening in the labour market.

"Importantly there was a notable absence of caveats such as

'gradual/gradualism' as used by other Fed officials," noted

Tapas Strickland, head of market economics at NAB.

"The jobs report on September 6 is clearly important as

Powell is willing to cut rates to ward off downside risks to

employment and to maintain a strong labour market," he added.

"In summary, Powell has increased the chances of a soft

landing."

LOTS OF CUTS COMING

Figures on U.S personal consumption and core inflation are

due on Friday, along with a flash reading on European Union

inflation. Analysts generally assume the data will be benign

enough to allow for rate cuts in September.

Fed fund futures are fully priced for a

quarter-point cut at the Sept. 18 meeting, and imply a 38%

chance of an outsized move of 50 basis points. The market also

has 103 basis points of easing priced in for this year and

another 122 basis points in 2025.

"We continue to expect the FOMC to deliver an initial string

of three consecutive 25bp cuts at the September, November, and

December meetings," said analysts at Goldman Sachs.

"Our forecast rests on our assumption that the August

employment report will be stronger than the July report, but we

continue to think that if instead the August report is weaker

than we expect, then a 50bp cut would be likely."

Markets are also fully priced for a quarter-point cut from

the European Central Bank next month, and a total 163 basis

points of easing by the end of 2025.

Yields on two-year Treasuries stood at 3.89%,

having fallen almost 10 basis points on Friday, while 10-year

yields held at 3.79%.

The dollar slipped a further 0.2% to 144.14 yen,

having fallen 1.3% on Friday. The euro was up at $1.1187

and just off a 13-month top, while the Swiss franc

held firm at 0.8474 per dollar.

A softer dollar combined with lower bond yields to underpin

gold at $2,514 an ounce, and near an all-time peak of

$2,531.60.