Asia-Pacific markets decline as strong U.S. jobs report fuels Fed rate concerns and China’s economic updates.
Asian stock markets experienced a broad decline on Monday following a strong U.S. jobs report that fueled concerns over the Federal Reserve maintaining its tight monetary stance for longer than anticipated. Simultaneously, China’s latest trade data surpassed expectations, though economic concerns remained as investors monitored the country’s bond market activity.
Global Market Overview:
- Asian Stock Markets:
- Nikkei 225: Down 1.04%
- Shanghai Composite: Down 0.44%
- Hang Seng: Down 1.17%
- ASX 200: Down 1.24%
- Commodities:
- Gold: $2712.35 (-0.16%)
- Silver: $31.14 (-0.48%)
- Brent Oil: $81.29 (+1.89%)
- WTI Oil: $77.36 (+1.71%)
- Interest Rates:
- U.S. 10-year yield: 4.763%
- U.K. 10-year yield: 4.835%
- Germany 10-year yield: 2.5675%
Key Economic Data:
- Canada: Employment surged with a 90.9K increase in jobs, well above the expected 24.9 K. Unemployment fell to 6.7%, beating forecasts of 6.9%.
- U.S.: Non-farm payrolls rose by 256K in December, surpassing the 164K estimate. Unemployment unexpectedly dropped to 4.1%, fueling concerns about persistent inflationary pressures.
Asia-Pacific Markets Slide on Fed Concerns: Market Focus
Market Performance:
The Asian market slide on Monday primarily driven by the aftermath of the U.S. employment data, which showed a stronger-than-expected job market. This increased expectations that the Federal Reserve will keep interest rates elevated for an extended period, challenging hopes for rate cuts in the near future.
Meanwhile, China’s December trade data was mixed. Exports grew by 10.7% year-on-year, outpacing the forecasted 7.3%, while imports increased by just 1%—short of the 1.5% decline analysts had predicted. However, investors remained cautious after the People’s Bank of China (PBoC) suspended government bond purchases, and China’s CSI 300 index dropped by 0.5%, marking its lowest level since September 2024.
Adding to the pessimism, China’s 10-year bond yield hit a record low, and the onshore yuan fell to a 16-month low. Hong Kong’s Hang Seng Index slid 1.18%, dropping below the 19,000 mark, its lowest level since September 2024.
Markets in India also faced downward pressure, with the Nifty 50 and BSE Sensex losing 0.53% and 0.4%, respectively, ahead of inflation data expected later in the week. South Korea’s Kospi dropped 1.04%, while the Kosdaq fell 1.26%. The S&P/ASX 200 in Australia lost 1.23%.
Japanese markets were closed for a holiday, and the global uncertainty left investors cautious about the upcoming economic data releases.
This week, key updates include Australia’s unemployment data on Thursday, followed by China’s Q4 GDP, retail sales, and industrial output on Friday. The Bank of Korea’s policy meeting will also be in focus as markets brace for any shifts in monetary policy amid global uncertainties.
In the U.S., major indices tumbled after the jobs report exceeded expectations last Friday. The Dow Jones Industrial Average dropped 696.75 points, or 1.63%, while the S&P 500 and Nasdaq Composite fell by 1.54% and 1.63%, respectively. The unexpected decline in the unemployment rate to 4.1% added pressure to the markets, as Treasury yields rose to their highest level since 2023, sending shockwaves through major stock indexes.
Upcoming Events:
- 07:00 PM GMT – USD Federal Budget Balance
As the global economic landscape evolves, traders and investors will closely monitor upcoming reports for signs of a shift in monetary policy or signals from major central banks. The economic data in the coming days could play a pivotal role in shaping market sentiment as the year unfolds.
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