(Bloomberg) — Asian stocks fell with European and US equity futures as traders trimmed bets on Federal Reserve interest-rate cuts after Friday’s payroll data. The pound extended last week’s slump.
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MSCI’s index of Asian equities slid for a fourth day, with benchmarks falling across the region. Oil climbed to a four-month high as a fresh wave of US sanctions on Russia threatened to crimp supplies. Bloomberg’s gauge of the dollar climbed to a two-year high.
“The market is really going with the story that there will be less and less cuts” by the Fed, Eugenia Victorino, head of Asia strategy at Skandinaviska Enskilda Banken AB, said in an interview on Bloomberg Television. “At this point, you still have so much uncertainty at least as far as the incoming Trump policies are concerned.”
The MSCI Asia Pacific Index dropped as much as 1.1%, putting the benchmark down more than 3% this month.
Chinese shares extended losses even after local data showed exports rose to a record last year. This may be one of the last high points for the country’s trade, with US President-elect Donald Trump promising to impose even higher tariffs on Chinese goods when he takes office next week.
Brent crude climbed above $81 a barrel in early Asian trading, after surging almost 4% Friday. That was after the US imposed its most aggressive and ambitious sanctions yet on Russia’s oil industry, targeting two large exporters, insurance companies, and more than 150 tankers.
The pound slid as much as 0.7% to $1.2126, the weakest level since November 2023, following its 1.7% slump last week.
A “slowing economy, growing twin deficits of current account and fiscal accounts are negatives for the pound,” said Christopher Wong, a foreign-exchange strategist at Oversea-Chinese Banking Corp. in Singapore.
Bonds Decline
Bonds dropped in Asia following last week’s Treasury declines. Australian 10-year yields climbed as much as 12 basis points to 4.66%, while New Zealand’s rose seven basis points.
US sovereign bonds had slumped on Friday after the December payroll data, sending the 30-year yield above 5% for the first time in more than a year. There was no cash trading of Treasuries in Asia Monday due to a holiday in Japan.
China ramped up its support for the yuan with a warning and tweaks to its capital controls, after the currency dropped close to a record low against the dollar in offshore trading.
The People’s Bank of China and other regulators will strengthen their management of the foreign-exchange market, deal with any behavior that may disrupt market order and prevent the risks of an overshoot in the yuan. Beijing will make sure the currency is basically stable at reasonable levels, the central bank said in a statement.
US Inflation
The next key number from the US will be inflation figures due Wednesday. Traders will also be watching the New York Fed’s one-year inflation expectations due Monday, producer prices on Tuesday and jobless claims on Thursday.
Bank of America Corp., which previously expected two quarter-point Fed rate cuts this year, said it no longer expects any, and said there’s a risk the next move is a hike. Goldman Sachs Group Inc. sees two cuts this year versus three.
Key events this week:
India CPI, Monday
ECB Chief Economist Philip Lane and Governing Council member Olli Rehn speak in Hong Kong, Monday
New York Fed President John Williams speaks, Tuesday
Bank of Japan Deputy Governor Ryozo Himino speaks, Tuesday
Eurozone industrial production, Wednesday
France CPI, Wednesday
UK CPI and US CPI, Wednesday
Chicago Fed President Austan Goolsbee, Minneapolis Fed President Neel Kashkari speak, Wednesday
Australia unemployment, Thursday
Germany CPI, Thursday
US initial jobless claims, retail sales, import prices, Thursday
Bank of America, Morgan Stanley earnings, Thursday
China GDP, property prices, retail sales, industrial production, Friday
Eurozone CPI, Friday
US housing starts, industrial production, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.4% as of 3:49 p.m. Tokyo time
S&P/ASX 200 futures rose 0.1%
Hong Kong’s Hang Seng fell 1.1%
The Shanghai Composite fell 0.3%
Euro Stoxx 50 futures fell 0.3%
Currencies
The Bloomberg Dollar Spot Index rose 0.2%
The euro fell 0.3% to $1.0217
The Japanese yen was little changed at 157.58 per dollar
The offshore yuan rose 0.1% to 7.3527 per dollar
Cryptocurrencies
Bitcoin fell 0.9% to $93,507.34
Ether fell 2.1% to $3,196.96
Bonds
The yield on 10-year Treasuries advanced seven basis points to 4.76%
Japan’s 10-year yield advanced three basis points to 1.200%
Australia’s 10-year yield advanced nine basis points to 4.63%
Commodities
This story was produced with the assistance of Bloomberg Automation.
Patricia Allen is a writer who loves to travel and explore new places. She's also passionate about fashion and style, so she often writes about cars and fashion on her blog.
She earned her degree in English Literature from Stanford University, where she studied under some of the most renowned writers of our time. After graduating, she moved to New York City to pursue her career as a writer. She has since written for several publications on topics ranging from arts to automotive news.
