Asian markets dip after Wall Street had its worst week in nearly 18 months
HONG KONG — Asian shares fell on Monday after Wall Street was hit by another decline on Friday amid expectations for a much-awaited update on the US labor market. came in weak enough to increase concerns about the economy.
The Nikkei 225 index hovered near its lowest level in nearly a month as it fell 2.1% to 35,613.32 in morning trade. Japan’s gross domestic product grew an annualized 2.9% in the second quarter, according to revised Cabinet Office data released on Monday. That was below expectations.
“Any broader risk aversion could have amplified effects on Japanese equities, with safe-haven flows potentially supporting the yen, which is seen as negative for the country’s exporters,” Yeap Jun Rong, chief market strategist at IG, said in a commentary.
The US dollar was trading below 143 Japanese yen on Monday morning.
Shares in Chinese markets also suffered losses after investors were disappointed by worse-than-expected inflation figures. Data from the National Bureau of Statistics on Monday showed deflationary pressures remained high as the consumer price index rose 0.6% year-on-year in August, while the consumer inflation indicator fell 1.8% from August last year.
Hong Kong’s Hang Seng index fell 1.8% to 17,123.90 and the Shanghai Composite index fell 0.9% to 2,740.71.
Australia’s S&P/ASX 200 fell 0.6% to 7,967.10. South Korea’s Kospi lost 0.8% to 2,523.86.
US futures and oil prices rose.
Friday is the S&The P500 fell 1.7% to close at 5,408.42, marking its worst week since March 2023. Broadcom, Nvidia and other technology companies dragged the market lower on persistent concerns that their prices were rising too high amid the artificial intelligence boom. They dragged the Nasdaq Composite down a market-leading 2.6% to 16,690.83.
The Dow Jones Industrial Average fell 1% to 40,345.41.
Sharp swings also hit the bond market, where Treasury yields tumbled, rebounded and then fell again after the jobs report showed U.S. employers hired fewer workers in August than economists had expected. It was billed as the most important jobs report of the year and it showed a second month in a row where hiring came in below forecasts. It also followed recent reports that showed weakness in production and other areas of the economy.
Such an easing of the labor market is, in fact, exactly what the Federal Reserve and its chairman, Jerome Powell, have been trying to achieve. suppress high inflation“But only to a certain extent and the data is now testing the limits set by Chairman Powell,” said Scott Wren, senior global market strategist at Wells Fargo Investment Institute.
Friday’s data raised questions about how much the Federal Reserve will invest. lower its key interest rate by at its meeting later this month. The Fed is poised to shift its focus more toward protecting the labor market and prevent a recession after holding the federal interest rate at its highest level in two decades for more than a year.
Rate cuts can boost investment prices, but the concern on Wall Street is that the Fed may be acting too late. If a recession comes, it would undermine corporate profits and wipe out the benefits of lower rates.
Still, the jobs report did contain some encouraging data points. First, the unemployment rate improved to 4.2% from 4.3% a month earlier. That was better than economists had expected. And even if hiring was weaker than forecast in August, it was still better than the pace in July.
All this uncertainty sent Treasury yields skyrocketing in the bond market as traders tried to predict the Fed’s next moves.
The two-year Treasury yield initially fell to 3.64% after the jobs report was released, before quickly climbing back above 3.76%. It then fell back to 3.66% after Waller’s comments, down from 3.74% on Thursday night.
In energy trading, U.S. benchmark crude rose 88 cents to $68.55 a barrel. Brent crude, the international standard, rose 86 cents to $71.92 a barrel.
In currency trading, the US dollar rose slightly to 142.72 Japanese yen from 142.27 yen. The euro was worth $1.1080, little changed from $1.1083.
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Stan Choe, a staff writer with AP Business Writers, contributed.