(Bloomberg) — Asian stocks fell on Monday after U.S. jobs data raised concerns that the Federal Reserve may have waited too long to cut interest rates.
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Stocks in Australia, Japan and South Korea piled on losses in early trading, while U.S. futures were little changed. The dollar was flat against its peers, with traders divided on the size of Fed 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 debate over how much the Fed should cut interest rates. After the data was released, Fed Governor Christopher Waller said he was “open” to the possibility of a bigger rate cut.
“Asian stock markets, especially in technology-driven regions such as Japan, Taiwan and South Korea, are bracing for a storm with their economies extremely sensitive to the looming global crisis,” said Hebe Chen, an analyst at IG Markets Ltd. “If the dark clouds of a struggling US economy spread globally, risk-sensitive currencies such as the Australian dollar could soon come under severe pressure,” she said.
Just before Tokyo stocks opened 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 weakened slightly against the dollar early on Monday, while the Nikkei 225 index fell as much as 3%.
Chinese assets will be in focus as authorities look to boost sentiment by lifting restrictions on foreign ownership in manufacturing and health care sectors. Shares of Seven & i Holdings Co. will be closely watched amid speculation about a takeover bid by Alimentation Couche-Tard Inc. Australian 10-year bond yields rose in early trading.
The People’s Bank of China kept its gold purchases on hold for a fourth month in August, another sign that prices near record highs are limiting demand from global central banks.
September is proving to be a volatile month for markets as global stocks and commodities plunged amid fears of tepid global growth. Further unrest is likely as Chinese inflation and producer price data due later on Monday may highlight the economic malaise that policymakers are struggling to counter.
Traders will be keeping a close eye on US inflation data this week as concerns mount that the Federal Reserve has waited too long to cut interest rates at a time when recession risks are rising. Over the weekend, Treasury Secretary Janet Yellen sought to temper fears as she sees no “red lights” in the financial system and reiterated her view that the US economy has reached a soft landing even as job growth weakens.
Comments by Federal Reserve policymakers after the jobs data “did not indicate an immediate sense of urgency regarding the need to cut interest rates by 50 basis points,” said Diana Mousina, deputy chief economist at AMP Ltd. in Sydney. “A 25-basis-point cut is therefore more likely in September, with the risk of larger rate cuts if the data indicate the need for one.”
In other commodities, oil rose early Monday after dipping below $68 a barrel on Friday as the U.S. jobs report added to concerns about tepid crude demand.
Some key events this week:
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China CPI and PPP, Monday
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Japan GDP, Monday
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Chile copper exports, trade, Monday
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Mexico CPI, Monday
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Australian consumer confidence, Tuesday
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Trade with China, Tuesday
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Meeting of the Standing Committee of the National People’s Congress of China begins on Tuesday
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German CPI, Tuesday
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UK jobless claims, Tuesday
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South Africa manufacturing output, Tuesday
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Bank of Canada Governor Tiff Macklem speaks Tuesday
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Brazil CPI, Tuesday
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Harris vs. Trump debate, Tuesday
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Reserve Bank of Australia Deputy Governor Sarah Hunter speaks on Wednesday
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BOJ board member Nakagawa Junko speaks on Wednesday
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South Korea unemployment rate, Wednesday
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UK industrial production, Wednesday
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US CPI, Wednesday
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Japan CPI, Thursday
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BOJ board member Naoki Tamura speaks on Thursday
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India: CPI, industrial production, trade, Thursday
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ECB Eurozone Interest Rate Decision, Thursday
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Swiss National Bank President Thomas Jordan speaks on Thursday
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Peru rate decision, Thursday
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US initial jobless claims and PPI, Thursday
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New Zealand PMI, Friday
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Eurozone industrial production, Friday
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French CPI, Friday
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ECB Governing Council member Olli Rehn speaks on Friday
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Consumer sentiment from the University of Michigan, USA, Friday
Some of the main movements in the markets:
Stocks
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S&P 500 futures were up 0.1% as of 9:24 a.m. Tokyo time.
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Hang Seng futures little changed
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Japan’s Topix index fell 2.6%
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Australia’s S&P/ASX 200 index fell 1%
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Euro Stoxx 50 futures fell 1.9%
Coins
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Bloomberg Dollar Spot Index little changed
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The euro remained virtually unchanged at $1.1088.
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The Japanese yen fell 0.3 percent to 142.67 per dollar.
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The offshore yuan fell 0.1% to 7.1044 per dollar.
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The Australian dollar was little changed at $0.6675.
Cryptocurrencies
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Bitcoin rose 1.4% to $55,123.01
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Ether rose 1.4% to $2,308.07
Captivity
Raw materials
This story was produced with assistance from Bloomberg Automation.
–With assistance from Georgina McKay.
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