KONTAN.CO.ID - SYDNEY. Asian shares got off to a slow start on Monday in what will be a holiday-shortened week and with market valuations looking a little stretched given they have already priced in aggressive global policy easing for next year.

The Black Friday sales will test the pulse of the consumer-driven U.S. economy this week, while the Thanksgiving holiday will make for thin markets.

There were media reports Israel, the United States and Hamas had reached a tentative agreement to free dozens of hostages in Gaza in exchange for a five-day pause in fighting, but no confirmation as yet.

MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.1%, having climbed 2.8% last week to a two-month high.

Japan's Nikkei was little changed, and is up almost 9% for the month so far amid upbeat corporate earnings.

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S&P 500 futures eased 0.1% and Nasdaq futures lost 0.2%. The S&P is now up nearly 18% for the year and less than 2% away from its July peak.

Yet analysts at Goldman Sachs note the "Magnificent 7" mega cap stocks have returned 73% for the year so far, compared with just 6% for the remaining 493 firms.

"We expect the mega-cap tech stocks will continue to outperform given their superior expected sales growth, margins, re-investment ratios, and balance sheet strength," they wrote in a note. "But the risk/reward profile is not especially compelling given elevated expectations."

Tech major Nvidia reports quarterly results on Tuesday, and all eyes will be on the state of demand for its AI related products.

The flow of U.S. economic data turns to a trickle this week, but minutes of the Federal Reserve's last meeting will offer some colour on policy makers' thinking as they held rates steady for a second time.

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Markets have all but priced out the risk of a further hike in December or next year, and imply a 30% chance of an easing starting in March. Futures also imply around 100 basis points of cuts for 2024, up from 77 basis points before the benign October inflation report shook markets.

That outlook helped bonds rally, with 10-year Treasury yields down at 4.43% having dropped 19 basis points last week and away from October's 5.02% high.

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It also dragged the U.S. dollar down almost 2% on a basket of currencies and helped the euro up to $1.0907 having jumped 2.1% last week.

The dollar even lost ground to the low-yielding yen, last sitting at 149.90 and short of its recent top of 151.92. Futures data showed speculative accounts had expanded their short yen positioning to the highest level since April 2022, suggesting a risk those positions could get squeezed out.

Closely watched surveys of European manufacturing are due this week and any hint of weakness will encourage more wagers n early rate cuts from the European Central Bank.

"These surveys will be very important around the Euro area services sector given the sharp deterioration seen recently," said analysts at NAB. "If another soft print eventuates, expect pricing for ECB cuts to extend beyond the current 100bps of cuts being priced for 2024."

Markets imply around a 70% chance of an easing as soon as April, even though many ECB officials are still talking of the need to keep policy tight for longer.

Sweden's central bank meets this week and may hike again, given high inflation and the weakness of its currency.

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In commodity markets, oil rebounded from four-month lows on Friday amid speculation OPEC+ will extend its production cuts into next year.

Brent nudged up 22 cents to $80.83 a barrel, while U.S. crude firmed 19 cents to $76.08 per barrel.

Gold was slightly lower at $1,974 an ounce having climbed 2.2% last week.

Editor: Anna Suci Perwitasari