Asia’s major market returned mixed results on Monday after a forecast-busting US jobs report reinforced optimism that the world’s top economy was well on the recovery track – but also ramped up expectations of an interest rate hike.
The much-anticipated non-farm payrolls data on Friday saw the Labor Department sharply revise up the previous three months’ readings, while also revealing a wage growth surge.
With all-important reports this week tipped to show inflation rising at a pace not seen for four decades, traders are becoming increasingly anxious about the US central bank’s plans to bring prices under control while being careful not to jeopardise the recovery.
There is mounting talk that officials will have to hike borrowing costs at least four times this year – with some predicting as many as seven rises could be on the cards.
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The move to tighter policies, which is likely to start in March, will bring an end to the era of ultra-cheap cash that has helped fuel a near two-year markets rally. And that has been acting as a hefty weight on stocks at the start of the year.
With the jobs figures showing the economy remained resilient in the face of the Omicron coronavirus variant, supply chain snarls and surging prices, Wall Street mostly rose, helped by a thumping rise in Amazon.
The S&P 500 and Nasdaq closed on a positive note, though the Dow dipped on Friday.
Asia was mixed on Monday with Shanghai leading the gainers as investors returned from their week-long Lunar New Year break, while Singapore, Taipei, Bangkok and Jakarta were also in positive territory.
Hong Kong finished marginally higher thanks to a late-afternoon rally from negative territory, following a 3% surge on Friday.
The Shanghai Composite Index added 2.03%, or 68.14 points, to 3,429.58, while the Shenzhen Composite Index on China’s second exchange rose 1.04%, or 23.62 points, to 2,285.99. The Hang Seng Index inched up 6.26 points, or 0.03%, to 24,579.55.
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Tokyo, Seoul, Mumbai and Manila closed down. The benchmark Nikkei 225 index dropped 0.70% or 191.12 points to end at 27,248.87 and the broader Topix index fell 0.24%, or 4.57 points, to 1,925.99.
Sydney was also in the red despite news that Australia will open its borders to tourists this month, ending almost two years of tough restrictions. The announcement helped Qantas surge more than 4%.
London, Paris and Frankfurt all rose in opening business.
Oil edged down after another surge, but expectations demand will continue to improve as the world economy reopens is supporting prices, with a cold snap in the United States and ongoing uncertainty over the Russia-Ukraine stand-off feeding expectations to the upside.
Brent briefly hit $94 for the first time since October 2014 before dipping back, but analysts have predicted the contract, as well as West Texas Intermediate, could top $100 soon. Still, signs of a breakthrough in Iran nuclear talks could help staunch the surge, observers said.
Key figures around 0820 GMT
Tokyo > Nikkei 225: DOWN 0.7% at 27,248.87 (close)
Hong Kong > Hang Seng Index: FLAT at 24,579.55 (close)
Shanghai > Composite: UP 2.0% at 3,429.58 (close)
London > FTSE 100: UP 0.5% at 7,556.96
New York > Dow: DOWN 0.1% at 35,089.74 (Friday close)
- AFP with additional editing by Sean O’Meara
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