Asia Markets Decline as U.S. Jobs Report Suggests More Rate Hikes

On Monday, Asian stocks fell broadly as a stronger-than-expected US jobs report raised the prospect of further Fed rate hikes, while concerns over US-China geopolitical tensions weighed on mood.

As of 9.28 A.M. (Thai time), Hong Kong’s Hang Seng index fell 1.79% as property and technology stocks led losses. The Shanghai Composite in mainland China also lost 0.55%.

In Japan, the Nikkei 225 gained 1.08% while the Kospi in South Korea fell 0.61%. The S&P/ASX 200 slid 0.25%.

Wall Street stocks closed down on Friday after the jobs report, as the 10-year Treasury yield jumped beyond 3.5%, a gain of more than 12 basis points.

Alphabet, the parent company of Google, had its stock price decrease by 2.8% after the search engine revealed its steepest quarterly revenue decline since 2016. Meanwhile, Apple’s stock price rose by 2.4%. Following the release of its earnings report, Amazon’s stock saw its worst day since April, falling 8.4%.

A Labor Department report released on Friday showed that nonfarm payrolls in the United States climbed by 517,000 in January, which was far more than the Dow Jones estimate of 187,000 and December’s gain of 260,000.

Unemployment dropped to 3.4%, lower than the predicted 3.6%. As of this reporting, it is the lowest jobless rate since May of 1969. With a little increase, the labor force participation rate now stands at 62.4%.

After January’s employment report revealed a surge in new jobs, markets priced in the likelihood of more interest rate hikes by the Federal Reserve to its predicted 5.25% for the high end of its fed funds target rate range.

The Fed has good reason to fear that inflation may quickly rise again. Wage growth is slowing in this indicator, but robust aggregate demand still makes it difficult to increase prices. Wages are represented here. Diane Swonk, the chief economist at KPMG, has noted that “some of them have numerous.” There is still a great deal of information to collect before March. A quarter of a point [increase] is all right for the time being. Their commitment to the 5.25% rate is firm, added Swonk.