Source: AFP
Stock markets fell on Monday, extending a weak start to the year after a US jobs report further dampened hopes for an early rate cut in the world’s biggest economy.
U.S. and European oil futures fell nearly 3 percent after the price of top producer Saudi Arabia’s crude fell, analysts said, also weighing on shares of major energy companies.
Long-awaited nonfarm payrolls data on Friday showed the U.S. economy remained resilient despite interest rates remaining at a two-decade high and inflation still well above the Federal Reserve’s target.
However, the data dealt another blow to expectations that the central bank will start cutting borrowing costs in the coming months.
“Friday’s US jobs report brought renewed concerns about the possibility of the Fed cutting interest rates in March, as markets widely expected a hot payrolls number to be accompanied by higher wage growth,” noted Joshua Mahony, chief market analyst at Scope Markets. .
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Asian markets fall as US jobs deal fresh blow to hopes of early rate cut
Attention now turns to this week’s release of US consumer price data.
Stocks ended 2023 higher as traders bet on a series of rate cuts this year thanks to falling inflation and a softening labor market.
But last week’s release of minutes from the Fed’s December meeting showed that policymakers were willing to keep interest rates high for some time to make sure they had prices under control.
Policymakers have signaled cuts of 75 basis points this year, but markets have priced in as much as 150 basis points, leaving investors open to disappointment.
“The first week of 2024 brought mixed data signals,” Barclays economists wrote in a client note.
“Stable US job growth, cautious Fed minutes and a still robust US economy raise doubts about the Fed’s aggressive expectations to cut market interest rates,” he added.
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US hiring beat expectations in December
A sharp slowdown in the US services sector provided some comfort to investors as it suggested the economy was slowing, giving the Fed room to maneuver.
Wall Street closed slightly higher on Friday, but the positive finish failed to carry over into Monday’s trading.
A sell-off in tech giants hit Hong Kong, while Shanghai was also deep in retreat. Tokyo was closed for a holiday.
London and Paris fell, while Frankfurt rose, nearing the halfway point of European deals.
In US premarket trading, Boeing shares fell more than eight percent after a mid-air emergency on Friday in which a piece of fuselage came off a 737 MAX 9 jet as it flew over the US west coast.
Shell lost two percent in London, also weighed down by a mixed trading update ahead of the British energy group’s annual earnings due next month.
Keys around 11:00 GMT
London – FTSE 100: Down 0.4% to 7,661.55 points
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Inflation in the Eurozone reached 2.9% in December
Paris – CAC 40: Down 0.2% to 7,404.39 points
Frankfurt – DAX: Down 0.1% at 16,585.94
EURO STOXX 50: Down 0.2% to 4,456.89
Hong Kong – Hang Seng Index: Down 1.9 percent at 16,224.45 (close)
Shanghai Composite: DOWN 1.4 percent at 2,887.54 (close)
Tokyo – Nikkei 225: Closed due to holiday
New York – Dow: UP 0.1 percent at 37,466.11 (close)
EUR/USD: UP at $1.0943 from $1.0942 on Friday
Dollar/yen: DOWN to ¥144.40 from ¥144.69
GBP/USD: DOWN to $1.2708 from $1.2718
Euro/pound: UP to 86.12 pence from 86.01 pence
West Texas Intermediate: DOWN 2.9% to $71.70 a barrel
North Sea Brent crude: DOWN 2.8% to $76.55 a barrel
Source: AFP