Most Asian markets drop as US jobs data fan rate worries

Asian markets fall as China reopening spurs inflation fears

HONG KONG: Asian markets mostly fell Monday and the dollar extended gains after a forecast-busting US jobs report fanned expectations of more Federal Reserve interest rate hikes.

Adding to the downbeat mood were geopolitical concerns after the United States shot down a suspected Chinese spy balloon that had floated across the country for days.

The rally enjoyed through January has come to a halt this month as investors contemplate an extended period of high borrowing costs aimed at bringing inflation down from multi-decade highs.

A softer tone from the Fed regarding its monetary tightening campaign had allowed market participants to entertain the possibility of a pause, or even a cut, later in the year.

But that optimism was dealt a heavy blow Friday by data showing more than half a million new jobs were created in the United States last month, nearly double the December figure and far more than the 188,000 expected.

Government figures also showed unemployment fell to the lowest level since 1969.

The reading showed the world’s biggest economy remained strong despite almost a year of rate hikes and soaring prices, indicating the Fed still had plenty of work to do to rein in inflation.

“We are concerned that on the back of this kind of jobs report, it definitely holds the Fed to a higher-for-longer path,” said Lisa Erickson at US Bank Wealth Management.

“There are of course other data points that are going to come before the next meeting, but it certainly puts a placeholder that the labour market continues to run some risk of being extremely tight.”

Traders now expect the Fed to keep pushing rates up to more than five percent before stopping.

And San Francisco Fed chief Mary Daly said she was prepared to keep hiking, while rates would also remain elevated for some time.

All three main indexes sank on Wall Street, with the Nasdaq down more than one percent as tech firms took a hit after disappointing earnings from giants Amazon, Alphabet and Apple.

The losses continued in Asia, with Hong Kong falling around two percent, while Shanghai, Sydney, Seoul, Taipei, Bangkok, Wellington Manila and Jakarta were also down. However, there were gains in Tokyo.


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