Asian stocks fell on Wednesday in thin holiday trading following a sharp selloff on Wall Street after the latest US data dealt a further blow to hopes that the Federal Reserve would cut interest rates this year.
The payroll figures followed a series of recent reports out of Washington that suggested central banks still have a long way to go in their fight against inflation, even though borrowing costs are at a 20-year high. Thing.
There is also more anxiety among investors ahead of the Fed’s latest policy decision later in the day, although many were already expecting officials to become more hawkish. .
Nonfarm payrolls (NFP) statistics will then be closely watched, providing a new picture of the labor market, which has so far remained resilient to the high interest rate environment.
Wall Street’s three major indexes fell sharply on Tuesday on news that the Federal Reserve’s preferred employment cost index as a measure of wage inflation beat expectations in the first quarter.
This was a further blow to expectations that the Fed would cut interest rates this year, which had been expected to be six times in early 2024, but had already been reduced to one by January.
Some are warning of a possible rate hike.
Investors tried to sideline the report as separate data showed that U.S. consumer confidence had fallen to its lowest level since July 2022.
“These statistics send a blunt message: there is no sign that inflation in the U.S. economy is slowing quickly,” said Stephen Innes of SPI Asset Management.
“Unless, of course, there is a significant change, such as a negative (NFP) outcome, these numbers essentially cancel out any hopes of an imminent rate cut.
“Overall, this data shows there is little support that the Fed will consider cutting rates in the near future and that more convincing evidence is needed to prompt a rate cut.”
The negative mood spread to Asia, with most markets closed for holidays.
Tokyo, Sydney and Wellington were all in the red.
“Markets will be a little thinner due to some holidays in China and Europe,” said Kyle Rodda, an analyst at Capital.com. It will be done,” he said.
“If the Fed insists there is a high probability that there will be no interest rate cuts this year, or even that there is a possibility of further rate hikes, the stock market decline could deepen further.”
The yen held its ground against the dollar after Monday’s volatility, hitting a 34-year low against the dollar, but then rebounded sharply amid suggestions that Japanese authorities had intervened in foreign exchange markets.
Although some stability has returned, traders remain wary of volatility, and observers say the stark differences between the Bank of Japan’s accommodative monetary policy and those of other central banks could lead to more violence. It warns that this is highly likely.
Oil prices fell on hopes for a ceasefire in Gaza after top US diplomat Antony Blinken urged Hamas to accept a ceasefire proposal on Tuesday.
Palestinian militants said they were considering a 40-day cease-fire and a plan to exchange dozens of hostages for more Palestinian prisoners.
– Main figures around 0230 GMT –
Tokyo – Nikkei Stock Average: down 0.6% to 38,189.54 (break)
Hong Kong – Hang Seng Index: Closed due to public holiday
Shanghai – Combined: Closed due to public holiday
Dollar/JPY: rose to 157.82 yen from Tuesday’s 157.80 yen
EUR/USD: down from $1.0673 to $1.0658
GBP/USD: down from $1.2493 to $1.2481
EUR/GBP: down from 85.41p to 85.40p
West Texas Intermediate: down 0.9% to $81.17 per barrel
Brent crude oil: down 0.8% to $85.65 per barrel
New York – Dow: down 1.5% to 37,815.92 (close)
London – FTSE 100: flat, 8,144.13 (closing price)
Dan/MTP
