Asia markets take a hit as blockbuster US jobs batter rate cut hopes

HONG KONG  -  Asian markets mostly fell Monday after a forecast-busting US jobs report and comments by Federal Reserve boss Je­rome Powell shattered any remaining hopes for a March interest rate cut. De­cision-makers left traders disappointed last week when they said after their lat­est meeting they were unlikely to loos­en policy at their next gathering. There were still some rumblings of a change in view if the non-farm payrolls data came in below expectations, but they were soon extinguished Friday by the highest reading in a year, while Decem­ber’s figure was ramped up.

The figures showed the labour market and world’s biggest economy remained robust despite borrowing costs sitting at two-decade highs, giving little room to the Fed to cut even as inflation comes down. That was followed by the airing Sunday of an interview with Powell in which he said the bank wanted to see more data. The “danger of moving too soon is that the job’s not quite done, and that the really good readings we’ve had for the last six months somehow turn out not to be a true indicator of where inflation’s heading”, he said ac­cording to a transcript from CBS. “The prudent thing to do is to, is to just give it some time and see that the data con­tinue to confirm that inflation is moving down to two percent in a sustainable way,” he said in the interview, which was conducted before the jobs report was released. The chances of a March reduction plunged to 20 percent after the reading, down from around 40 per­cent Thursday, according to Bloomberg News. They had been about 80 percent at the start of the year. “Initially, mar­kets were anticipating six cuts starting in March,” said Stephen Innes at SPI As­set Management. “However, Powell’s recent remarks suggest such an early move was improbable. Combined with a robust January jobs report, hopes of an early spring adjustment have moved from improbable to impossible.” And Yardeni Research president Ed Yardeni added that officials would likely contin­ue to push back against market specula­tion for five cuts before the end of the year. Still, Wall Street ended Friday with more big gains for all three main index­es, pushing the S&P 500 to a fresh record thanks to a rally in tech giants Meta and Amazon in the wake of strong earnings. The advance in New York was fuelled by optimism that the economy is not likely to fall into recession, while rates are also still expected to come down. But most of Asia struggled again, with Hong Kong and Shanghai extending a sell-off fuelled by growing concerns about the Chinese economy. Investors were unmoved by pledges from officials Sunday to pre­vent wild fluctuations in stocks, with the China Securities Regulatory Commis­sion vowing to guide more medium- and long-term funds into the market.

They provided few concrete plans, and observers said the move was un­likely to help turn sentiment around. “The statement sought to stabilise in­vestor sentiment, but didn’t touch on fundamental problems including a lack of confidence and huge economic un­certainty,” Shen Meng, at investment bank Chanson & Co, said. “Those is­sues are the causes of abnormal market fluctuation.” There were also losses in Sydney, Seoul, Singapore and Welling­ton. But Tokyo rose as the dollar rallied against the yen to boost exporters. The greenback surged Friday in reaction to the jobs data, which ramped up Trea­sury yields on the prospect of interest rates staying higher for longer.

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