Asian markets saw stocks and bonds retreating on Monday following stronger-than-expected US jobs data, while oil prices surged to a four-month high, fueled by new US sanctions on Russia that could disrupt global supplies.
MSCI’s regional equity index fell for a fourth consecutive day, reflecting investor concerns that the robust US employment figures would dampen expectations for further interest rate cuts by the Federal Reserve. US equity futures also pointed to further losses on Wall Street, building on Friday’s 1.5% drop in the S&P 500.
In the bond market, Australian and New Zealand bonds saw declines, following a sell-off in US Treasuries last week. The Australian 10-year yield rose by as much as 11 basis points to 4.66%, reflecting the broader upward movement in global yields after Friday’s US jobs report. US sovereign bonds had also slumped after the December payroll data, pushing the 30-year yield above 5% for the first time in over a year.
Lynn Song, chief Greater China economist at ING Bank NV, highlighted the broader impact of the US jobs data, noting, “Hawkish developments from the US jobs data add extra pressure on emerging markets, as markets have shifted from expecting three-to-four rate cuts before Trump’s election to just one now.”
Meanwhile, oil prices experienced significant gains, with Brent crude rising above $81 a barrel in early Asian trading, extending Friday’s nearly 4% surge. The rally was driven by the US’s most aggressive sanctions yet on Russia’s oil sector, which targeted major exporters, insurance firms, and over 150 tankers. This development is raising concerns about further tightening in global oil supplies, which could exacerbate inflationary pressures.
The rise in oil prices presents an additional challenge for central bankers, including the Federal Reserve, if it leads to sustained inflationary pressures. In currency markets, the US dollar saw mixed movements after Friday’s payroll data, though the Bloomberg Dollar Spot Index remained close to a two-year high.
With Japanese markets closed for a holiday, there was no trading in cash Treasuries during Asian hours, further highlighting the market’s focus on global developments, from US economic data to geopolitical tensions surrounding Russia.
Related topics:
Investors Eye Earnings Growth and Policy Shifts as Q4 Reports Begin
Foreign Investors Scale Back Japanese Stock Holdings as Profits Take Priority
China Expands Measures to Support Yuan with Record Hong Kong Bill Issuance
