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(Bloomberg) — Asian stocks fell along with European and U.S. stock futures as traders reduced bets on Federal Reserve interest rate cuts after Friday’s jobs data. The British pound extended last week’s fall.
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MSCI’s index of Asian shares fell for a fourth day, with benchmarks falling across the region. Oil rose to a four-month high as a new wave of U.S. sanctions on Russia threatened to cut supplies. The Bloomberg dollar indicator reached its highest level in two years.
“The market is really following the story that there will be fewer and fewer budget cuts” from the Fed, said Eugenia Victorino, head of Asia strategy at Skandinaviska Enskilda Banken AB, in an interview with Bloomberg Television . “At this point, there is still a lot of uncertainty, at least regarding Trump’s future policies. »
The MSCI Asia Pacific Index fell 1.1%, sending the benchmark index down more than 3% this month.
Chinese stocks extended losses even after local data showed exports hit a record last year. This may be one of the last major moments for the country’s trade, with US President-elect Donald Trump promising to impose even higher tariffs on Chinese goods when he takes office next year. next week.
Brent crude climbed above $81 a barrel in early Asian trading, after jumping nearly 4% on Friday. This was after the United States imposed its most aggressive and far-reaching sanctions yet against the Russian oil industry, targeting two major exporters, insurance companies and more than 150 oil tankers.
Sterling slipped 0.7% to $1.2126, its weakest level since November 2023, after falling 1.7% last week.
“A slowdown in the economy and a growing dual deficit in the current account and fiscal account are negative for the pound,” said Christopher Wong, currency strategist at Oversea-Chinese Banking Corp. in Singapore.
Decline of bonds
Bonds fell in Asia following last week’s declines in Treasuries. Australian 10-year yields rose 12 basis points to 4.66%, while New Zealand’s yields rose seven basis points.
U.S. sovereign bonds collapsed Friday after December jobs data, propelling the 30-year yield above 5% for the first time in more than a year. There were no spot transactions in Treasuries in Asia on Monday due to a public holiday in Japan.
China stepped up its support for the yuan with a warning and adjustments to its capital controls, after the currency fell near an all-time low against the dollar in offshore trading.
The People’s Bank of China and other regulators will strengthen their management of the foreign exchange market, address any behavior that could disrupt market order, and prevent risks of the yuan being overvalued. Beijing will ensure that the currency is fundamentally stable at reasonable levels, the central bank said in a statement.
American inflation
The next key figure from the United States will be inflation, expected on Wednesday. Traders will also watch the New York Fed’s one-year inflation expectations due on Monday, producer prices on Tuesday and jobless claims on Thursday.
Bank of America Corp., which previously expected two quarter-point rate cuts from the Fed this year, said it no longer expected any and said there was a risk that the next decision is an increase. Goldman Sachs Group Inc. plans two cuts this year compared to three.
Key events this week:
Indian CPI, Monday
ECB Chief Economist Philip Lane and Governing Council Member Olli Rehn speak in Hong Kong on Monday.
New York Fed President John Williams speaks Tuesday
Bank of Japan Deputy Governor Ryozo Himino Speaks Tuesday
Euro zone industrial production, Wednesday
IPC France, Wednesday
UK CPI and US CPI, Wednesday
Chicago Fed President Austan Goolsbee and Minneapolis Fed President Neel Kashkari will speak Wednesday.
Unemployment in Australia, Thursday
CPI Germany, Thursday
US initial jobless claims, retail sales, import prices, Thursday
Bank of America, Morgan Stanley results, Thursday
China GDP, house prices, retail sales, industrial production, Friday
Eurozone CPI, Friday
Housing starts and industrial production in the United States, Friday
Some of the main market movements:
Actions
S&P 500 futures fell 0.4% as of 3:49 p.m. Tokyo time
S&P/ASX 200 futures rose 0.1%
Hong Kong’s Hang Seng fell 1.1%
The Shanghai Composite index fell 0.3%
Euro Stoxx 50 futures fell 0.3%
Currencies
The Bloomberg Dollar Spot Index rose 0.2%
The euro fell 0.3% to $1.0217
The Japanese yen was little changed at 157.58 per dollar.
The offshore yuan rose 0.1% to 7.3527 per dollar.
Cryptocurrencies
Bitcoin fell 0.9% to $93,507.34
Ether fell 2.1% to $3,196.96
Bonds
The 10-year Treasury yield rose seven basis points to 4.76%
The Japanese 10-year yield rose three basis points to 1.200%
The Australian 10-year yield rose nine basis points to 4.63%
Raw materials
This story was produced with the help of Bloomberg Automation.
