BEIJING, China – Asian stock markets fell Monday after strong U.S. jobs data increased chances that the Federal Reserve will raise interest rates sooner.
KEEPING SCORE: The Shanghai Composite Index lost 1.1 per cent to 3,206.31 and Tokyo’s Nikkei 225 shed 0.7 per cent to 18,828.94. Hong Kong’s Hang Seng lost 0.7 per cent to 24,000.70 and Seoul’s Kospi declined 0.5 per cent to 2,002.00. Sydney, Singapore, New Zealand and Taiwan also fell. On Friday, the prospect of higher interest rates sent U.S. stocks tumbling.
JOBS JUMP: Strong U.S. employment growth in February was good news for workers but alarmed investors who worried a rate hike, previously not expected until as late as October, might happen as early as June. The Fed has held interest rates close to zero for more than six years to stimulate growth following the 2008 global crisis. But Friday’s announcement that employers added 295,000 jobs last month, which was far above expectations of about 235,000, fueled expectations unemployment would fall further and inflation might pick up. That could prompt the Fed to try to tame price pressures by raising rates, which would slow economic growth.
THE QUOTE: “The market has been positioning itself for a (U.S. interest rate) rise in October. Friday’s data suggest June or July is a real possibility,” IG market strategist Evan Lucas said in a report. “The reaction from the U.S. market on Friday shows no one is really positioned for moves in the Fed funds rate. The rush for the exit will be rapid when it does shift.”
CHINESE TRADE: Imports shrank in February for a second month, declining 20.5 per cent from a year earlier, in a new sign of weakness in the world’s second-largest economy. That brought the total contraction in Chinese imports for the first two months of the year to 20.2 per cent. Exports jumped 48.3 per cent but with January’s 3.3 per cent contraction factored in, growth so far this year is 15 per cent. The trade minister said Saturday weakness was expected in February trade but expressed confidence China can hit the government’s target of 6 per cent growth this year in total imports and exports.
WALL STREET: Stocks opened lower Friday and the losses accelerated throughout the day. By the close of trading the S&P 500 index had logged its biggest one-day loss since Jan. 5.The Standard & Poor’s 500 fell 29.78 points, or 1.4 per cent, to 2,071.26. The Dow Jones industrial average dropped 278.94 points, or 1.5 per cent, to 17,856.78. The Nasdaq composite fell 55.44 points, or 1.1 per cent, to 4,927.37.
ENERGY: Benchmark U.S. crude shed 22 cents to $49.38 per barrel in electronic trading on the New York Mercantile Exchange. The contract added 29 cents on Friday to close at $49.61. Brent crude, used to price international oils, lost 28 cents to $59.45 per barrel in London after gaining 48 cents on Friday to close at $59.73.
CURRENCIES: The dollar strengthened to 120.86 yen from Friday’s 120.81. The euro was little changed at $1.0843 from $1.0844.