Stocks in Asia retraced earlier gains as Friday’s US jobs data strengthened the case for a Federal Reserve interest-rate hike. Treasury yields fell after jumping on Friday.
(Bloomberg) — Stocks in Asia retraced earlier gains as Friday’s US jobs data strengthened the case for a Federal Reserve interest-rate hike. Treasury yields fell after jumping on Friday.
MSCI Inc.’s Asia-Pacific equity index gave up a gain of as much as 0.3% as shares in China slipped. Japanese and South Korea shares stayed higher. Posco Holdings Inc. led gains in Korean battery stocks on speculation the company’s lithium business will help to boost its profits.
US equity futures declined, while a number of markets including Hong Kong and Australia remain shut for Easter holidays.
Treasury yields dropped across the curve in Asia after rising Friday when the payrolls data boosted bets on a Fed rate increase in May. The numbers also eased concern the US economy is heading for a recession.
The dollar strengthened against all its Group-of-10 peers, while the yen weakened for a third day. Investors are keeping a close eye on new Bank of Japan Governor Kazuo Ueda who will hold his inaugural press conference later Monday.
Oil steadied and gold slipped. Cryptocurrencies were little changed.
Chinese military drills around Taiwan, following the island’s president visiting the US, may add to the sense of caution in Asian markets.
US payrolls rose at a robust pace in March of 236,000, which was in line with forecasts and followed an upwardly revised 326,000 advance in February. The unemployment rate dropped again to near record lows to 3.5%.
Swaps trading showed the odds for a quarter percentage point interest-rate increase at the Fed’s May meeting rose to about two in three, up from roughly 50-50 before the data landed. Investors have been aggressively pricing in rate cuts later this year as economic data falls short of estimates, suggesting the US economy is slowing.
“The Fed will still see the need for further cooling in the labor market,” Win Thin, global head of currency strategy at Brown Brothers Harriman, wrote in a note. “This week’s CPI and PPI data are likely to underscore the fact that inflation remains stubbornly high and so we look for the hawkish tilt in Fed comments to continue this week.”
Meanwhile, Easter holidays will also keep trading shuttered Monday in most of Europe.
The next major data point for the Fed is a report on consumer prices, due April 12. Fed officials deliver their next decision on May 3.
OPEC+ revived inflation jitters by cutting production so the next round of US data will have to show noticeable easing from the services side as well “for investors to really take inflation concerns off the table,” Charu Chanana, market strategist at Saxo Capital Markets, wrote in a note. “We don’t think we are there yet.”
Key events this week:
- US wholesale inventories, Monday
- New York Fed President John Williams takes part in discussion hosted by the Economics Review at New York University, Monday
- China PPI, CPI, Tuesday
- IMF world economic outlook, global financial stability reports, Tuesday
- Chicago Fed’s Austan Goolsbee, Minneapolis Fed’s Neel Kashkari and Philadelphia Fed’s Patrick Harker speak at separate events, Tuesday
- Canada rate decision, Wednesday
- US FOMC minutes, CPI, Wednesday
- Richmond Fed’s Thomas Barkin speaks, Wednesday
- China trade, Thursday
- US PPI, initial jobless claim, Thursday
- US retail sales, business inventories, industrial production, University of Michigan consumer sentiment, Friday
- Major US banks JPMorgan Chase, Wells Fargo and Citigroup report earnings, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 1 p.m. Tokyo time
- Nasdaq 100 futures fell 0.2%
- Japan’s Topix index rose 0.5%
- South Korea’s Kospi index rose 1.1%
- China’s Shanghai Composite Index fell 0.2%
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro was little changed at $1.0899
- The Japanese yen fell 0.4% to 132.71 per dollar
- The offshore yuan was little changed at 6.8786 per dollar
- The Australian dollar fell 0.1% to $0.6662
Cryptocurrencies
- Bitcoin rose 0.6% to $28,293.29
- Ether was little changed at $1,859.04
Bonds
- The yield on 10-year Treasuries declined two basis points to 3.37%
- Japan’s 10-year yield advanced one basis point to 0.465%
Commodities
- West Texas Intermediate crude fell 0.1% to $80.61 a barrel
- Spot gold fell 0.8% to $1,990.94 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Isabelle Lee, Katie Greifeld and Liz Capo McCormick.
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