Source: AFP
Asian markets tumbled on Monday after another batch of worse-than-expected US jobs data revived fears of a possible recession in the world’s top economy.
The big miss in August’s nonfarm payrolls reading was exacerbated by sharply revised downward figures for the previous two months and raised bets on a Federal Reserve rate cut next week.
A disappointing revenue forecast from chipmaker Broadcom added to the negative sentiment, dealing another blow to the technology sector, which was already under pressure on concerns that a rally this year may have been overdone.
Friday’s long-awaited report showed that about 142,000 jobs were created in the United States last month, higher than in July, but favorable forecasts.
Investors have been on edge since the July data, which helped spark a rout in the market on speculation that the Fed may have waited too long to cut borrowing costs as it focused on reducing inflation.
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After last month’s result, some analysts pointed to the “Sahm Rule,” which says an economy is in the early stages of a recession if the three-month moving average of the unemployment rate is 0.5 percentage points above its 12-year low. months.
Wall Street’s three main indexes fell on Friday on the latest news and pushed the dollar lower against its major peers.
With the central bank set to decide next week, the debate centers on whether to cut interest rates by 25 or 50 basis points.
“The report did not suggest a serious recession was imminent, but the softness in the numbers certainly points to an increase in the likelihood of a recession,” National Australia Bank’s Rodrigo Catril said.
“The Fed may just cut by 25 basis points in September, but will keep its options open for larger cuts in November and/or December, depending on how the data plays out from here.”
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After the report was released, Fed Governor Christopher Waller said he was open-minded about how much of a cut to make, but that officials needed to act.
“The current batch of data no longer calls for patience, it calls for action,” he warned, adding that he did not believe the economy was in or headed for recession.
Meanwhile, Chicago Fed President Austan Goolsbee told CNBC: “He’s looking at some serious questions, not just for this meeting, but for the next several months.
“How do we make an effort not to turn things into something worse.”
In early Asian trade, Tokyo was one of the worst hit as a stronger yen weighed on exporters, while Hong Kong, Shanghai, Sydney, Seoul, Taipei and Wellington were also very low.
Tech companies were hit hard again after big losses in their US counterparts.
Advantest lost more than 3 percent and Tokyo Electron about six percent in Tokyo, while Taipei-listed chip titan TSMC lost more than two percent, with SK hynix and Samsung each shedding a similar amount in Seoul.
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A slight pick-up in Chinese inflation did little to ease concerns about the world’s number two economy.
Oil prices jumped more than one percent, clawing back some of Friday’s heavy losses on demand worries as the U.S. outlook weakened.
The commodity was supported by news that OPEC and other key producers had delayed a planned output boost.
Keys around 02:30 GMT
Tokyo – Nikkei 225: Down 2.1 percent at 35,613.32 (break)
Hong Kong – Hang Seng Index: DOWN 1.9 percent to 17,119.92
Shanghai Composite: DOWN 0.9 percent at 2,741.82
Dollar/yen: UP to 142.70 yen from 142.29 yen on Friday
EUR/USD: DOWN to $1.1085 from $1.1089
GBP/USD: UP at $1.3139 from $1.3132
Euro/pound: DOWN to 84.39 pence from 84.41 pence
West Texas Intermediate: UP 1.5 percent to $68.69 a barrel
North Sea Brent crude: UP 1.4 percent at $72.07 a barrel
New York – Dow: DOWN 1.0 percent at 40,345.41 (close)
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London – FTSE 100: Down 0.7% to 8,181.47 (close)
Source: AFP
