Asian stock markets are in the ‘red’ area after strong US jobs data eroded concern sentiment but also added to the risk of a more aggressive tightening by the Federal Reserve (Fed).
Moreover, the geopolitical crisis continues to be a major concern of the White House with French President Emmanuel Macron set to pay a visit to Moscow.
MSCI’s broadest index of Asia-Pacific stocks outside Japan fell 0.1% with Japan’s Nikkei down 0.4% and South Korea 0.6%.
The S&P 500 and Nasdaq Composite futures changed little after the market turmoil last week when Amazon.com Inc made a profit of US $ 200 billion while Facebook -owned Meta Platfroms Inc did the opposite.
Bank of America (BofA) analyst Savita Subramanian noted that the company’s guidance for 2022 has fallen sharply with most stocks declining following earnings reports.
The January payroll report saw annual growth in average hourly earnings increase to 5.7% from 4.9% while the payroll for the previous month was revised by 709,000, further radically changing the hiring trend.
Next, consumer price figures for January will be released on Thursday and it could indicate core inflation is accelerating to the fastest rate since 1982 at 5.9%.
As a result, the market moves to a 33% chance that the Fed will raise rates by 50 basis points in March and the outlook for rates to reach 1.5% by the end of the year.
Turning to the currency market, the Euro continued to benefit from the European Central Bank’s (ECB) hawkish decision as the market saw the possibility of a first rate hike and made bond yields rise sharply.
The dollar is in a better position than the Japanese Yen as the market still sees a small chance the Bank of Japan (BOJ) will tighten this year, it was stable at 115.27 yen while the Euro rose 132.06 Yen after gaining 2.7% last week.
The strengthening of the Euro has caused the Dollar index to fall to 95.436 after declining 1.8% last week.
Oil prices approached a 7 -year high with Brent oil up 32 cents at $ 92.97 a barrel while US crude added 42 cents at $ 91.89.
Gold continued to strengthen at $ 1,808 an ounce.
