Asian Markets Extend Losses As US Rate Hike Fears Build

Stocks sank again Friday after another report pointing to a resilient US jobs market added to the misery for investors who fear the Federal Reserve is not finished with its campaign of monetary tightening

Hong Kong, (UrduPoint / Pakistan Point News - 8th Sep, 2023 ) :Stocks sank again Friday after another report pointing to a resilient US jobs market added to the misery for investors who fear the Federal Reserve is not finished with its campaign of monetary tightening.

The losses extended a sell-off endured for most of the week as various indicators suggested the world's top economy was in rude health and the battle against inflation was still far from won, while Chinese data showed continued weakness.

It followed a tough day on Wall Street, which was also hit by a sharp drop in Apple fuelled by concerns about China's decision to ban government departments from using iPhones.

Traders are now gearing up for policy decisions by major central banks towards the end of the month, with the Fed concluding a much-anticipated meeting on September 20.

Markets largely expect data-driven US officials to keep rates on hold at a two-decade high, having seen inflation come down in response to more than a year of hikes and signs of a softening labour market.

However, the latest set of strong readings -- including on the services sector and jobs -- and a surge in oil prices have sparked fears the Fed will announce one more hike before the end of the year or keep borrowing costs elevated for an extended period, risking a recession.

Those worries were compounded Thursday by news that jobs claims came in below forecasts last week.

"The higher-for-longer interest rate narrative and the inevitable lag effect of monetary policy create uncertainty around the Federal Reserve's ability to steer its monetary policies precisely," said Stephen Innes at SPI Asset Management.

"As a result, the Fed's choices in risk management will play a significant role in determining the economy's ultimate trajectory.

"Inflation has spiked significantly above its target and could remain very sticky as Saudi Arabia pursues a balanced budget through higher oil prices. Therefore, it would be wise for the Fed to tighten its monetary policy more instead of less, or at least keep the screws tighter for longer." - In the red - Meanwhile, Fed officials did little to soothe nerves.

New York Fed boss John Williams noted inflation was "moving in the right direction" but more hikes were not out of the question, while Atlanta head Raphael Bostic warned there was "still work to do".

Still, Chicago Fed chief Austan Goolsbee told the Marketplace radio programme: "We are very rapidly approaching the time when our argument is not going to be about how high should the rates go." Markets across most of Asia were in the red, with Tokyo losing more than one percent, while there were also losses in Shanghai, Sydney, Seoul, Singapore, Wellington, Taipei and Jakarta.

Manila, Mumbai and Bangkok squeezed out small gains.

Hong Kong was closed owing to a strong storm.

London, Paris and Frankfurt edged up at the open.

European natural gas prices jumped as much as 11 percent following news that talks to avert a strike at two Australian Chevron facilities had failed, and unions had started rolling walkouts.

The Yen strengthened further against the Dollar, having hit a 10-month low earlier in the week on Fed rate bets.

It also got support from Japanese Finance Minister Shunichi Suzuki, who said authorities were watching forex markets with a high sense of urgency and would keep options open, with a first intervention since November still a possibility.

Oil dipped again after a rally on the back of news that Saudi Arabia and Russia had extended an output cut to the end of the year, with economic uncertainty offsetting supply worries.

Investors will be keeping an eye on New Delhi, where India is hosting the latest G20 summit.

- Key figures around 0715 GMT - Tokyo - Nikkei 225: DOWN 1.2 percent at 32,606.84 (close) Shanghai - Composite: DOWN 0.2 percent at 3,116.72 (close) Hong Kong - Hang Seng Index: Closed for a storm London - FTSE 100: UP 0.2 percent at 7,455.43 Dollar/yen: DOWN at 147.10 yen from 147.25 yen on Thursday Euro/dollar: UP at $1.0714 from $1.0701 Pound/dollar: UP at $1.2481 from $1.2474 Euro/pound: UP at 85.84 pence from 85.76 pence West Texas Intermediate: DOWN 0.4 percent at $86.51 per barrelBrent North Sea crude: DOWN 0.2 percent at $89.70 per barrelNew York - Dow: UP 0.2 percent at 34,500.73 (close)