Stocks fall as jobs data adds to case for Fed tapering: Markets Wrap

(Bloomberg) — Asian shares fell on Monday after U.S. jobs data added to concerns that the Federal Reserve may have waited too long to cut interest rates.

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Shares in Australia, Japan and South Korea posted losses in early trade, while US futures were little changed. The dollar was flat against peers, with traders divided on the size of the Fed’s easing next week. Iron ore fell below $90 a tonne for the first time since late 2022.

Friday’s nonfarm payrolls data added to signs that the U.S. labor market is losing steam, fueling the debate over how much the Fed should cut interest rates. After the data was released, Fed Governor Christopher Waller said he was “open-minded” about the potential for more rate cuts.

“Asian stock markets, especially in technology-driven regions such as Japan, Taiwan and South Korea, are bracing for a storm as their economies are highly sensitive to the developing global recession,” said analyst Hebe Chen. at IG Markets Ltd. “If the dark clouds of a struggling US economy spread globally, risk-sensitive currencies like the Aussie could soon come under severe strain,” she said.

Just before stocks opened in Tokyo on Monday, data showed Japan’s economy expanded in the second quarter at a slightly slower pace than the government’s initial estimate. But it still advanced enough to keep the Bank of Japan on track to raise interest rates later this year. The yen was slightly weaker against the greenback early Monday, while the Nikkei 225 index fell as much as 3 percent.

Chinese assets will be in the spotlight as officials try to lift sentiment by lifting restrictions on foreign ownership in the manufacturing and health sectors. Shares of Seven & i Holdings Co. will be closely watched amid speculation about the takeover bid from Alimentation Couche-Tard Inc. Australia’s 10-year yield rose in early trade.

The People’s Bank of China kept its gold purchases on hold for a fourth month in August, another sign that prices near record levels are curbing global central bank demand.

September is proving to be a volatile month for markets as global stocks and commodities tumbled amid fears of tepid global growth. More unease is likely as China’s inflation and producer price data from months later may highlight the economic malaise that policymakers are scrambling to counter.

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Traders this week will be closely watching US inflation data as concerns grow the Fed has waited too long to cut interest rates as recession risks rise. Treasury Secretary Janet Yellen tried to temper fears over the weekend, not seeing “red lights” flashing for the financial system and reiterating her view that the US economy has hit a soft landing even as job growth weakens.

Comments from Fed policymakers after the jobs print “did not indicate a sense of immediate urgency in the need to cut interest rates by 50 basis points,” said Diana Mousina, deputy chief economist at AMP Ltd. in Sydney. “So a 25 basis point cut is more likely in September, with the risk of further rate cuts if the data suggests they are needed.”

In other commodities, oil rose early on Monday after falling below $68 a barrel on Friday as the US jobs report added to concerns about tepid demand for crude.

Some key events this week:

• China PPI, CPI, Monday

• Japan’s GDP, Monday

• Chile’s copper exports, trade, Monday

• CPI Mexico, Monday

• Australian consumer confidence on Tuesday

• Trade with China, Tuesday

• The meeting of the standing committee of the Chinese National People’s Congress begins on Tuesday

• CPI Germany, Tuesday

• UK jobless claims, unemployment, Tuesday

• South African manufacturing output on Tuesday

• Bank of Canada Governor Tiff Macklem speaks on Tuesday

• Brazil’s CPI on Tuesday

• Harris-Trump debate on Tuesday

• Reserve Bank of Australia Assistant Governor Sarah Hunter speaks on Wednesday

• BOJ board member Junko Nakagawa speaks on Wednesday

• South Korea’s unemployment rate on Wednesday

• UK industrial production on Wednesday

• US CPI, Wednesday

• Japan PPI, Thursday

• BOJ board member Naoki Tamura speaks on Thursday

• India CPI, industrial production, trade, Thursday

• The decision on the ECB rate in the euro area, on Thursday

• Swiss National Bank President Thomas Jordan speaks on Thursday

• Peru rate decision on Thursday

• US Initial Jobless Claims, PPI, Thursday

• New Zealand PMI on Friday

• Euro zone industrial production on Friday

• CPI France, Friday

• ECB Governing Council member Olli Rehn speaks on Friday

• University of Michigan Consumer Sentiment on Friday

Some of the main movements in the markets:

Stocks

• S&P 500 futures were up 0.1% as of 9:24 a.m. Tokyo time

• Hang Seng futures were little changed

• Japan’s Topix down 2.6%

• Australia’s S&P/ASX 200 fell 1%

• Euro Stoxx 50 futures fell 1.9%

Coins

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.1088

• The Japanese yen fell 0.3 percent to 142.67 per dollar

• The offshore yuan was down 0.1 percent at 7.1044 per dollar

• The Australian dollar was little changed at $0.6675

Cryptocurrencies

• Bitcoin rose 1.4% to $55,123.01

• Ether rose 1.4% to $2,308.07

BONDS

commodities

This story was produced with the help of Bloomberg Automation.

–With the assistance of Georgina McKay.

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