Investors feel uncomfortable on worries the Federal Reserve will raise interest rates as soon as March
Wall Street stocks finished lower on Friday, with the tech-heavy Nasdaq posting its worst week since February 2021, down more than 4%. The Labor Department reported the U.S. economy added 199,000 jobs in December versus the expected growth of 420,000. On the positive side, average hourly earnings increased by 0.6%, above expectations, while the unemployment rate fell to 3.9%, the lowest level since February 2020. The Nasdaq Composite dropped 0.9%, the S&P 500 fell 0.4% and the Dow Jones Industrial Average lost 0.01%.
Asian equities were mixed on Monday as investors felt uncomfortable on worries the Federal Reserve will raise interest rates as soon as March – the expectations were reinforced by stronger-than-expected wages in the US. The Shanghai Composite index gained 0.39% and the Hang Seng in Hong Kong advanced 1.08%. The Kospi in Seoul fell 0.95% and Sydney’s S&P ASX 200 lost 0.1%. Japanese markets were closed for a holiday.
In Europe, stock markets opened slightly higher on Monday before turning negative in recent trading, with the Stoxx 600 losing 0.5%. Market participants are getting nervous ahead of Powell’s speech and US inflation data due on Tuesday and Wednesday, respectively. Now, the probability of a 25 basis points rate by the Fed in March exceeds 73%, compared to 57.1% a week ago
In currencies, the dollar turned positive on Monday after a sell-off seen on Friday in reaction to the disappointing December Nonfarm Payrolls reading. The USD index, which dropped to 95.70 zone, is back near the 96.00 figure, adding nearly 0.25% on the day, as the 10-year US Treasury bond yield stays around the highest level in nearly two years on rising Fed rate hike bets. Strong inflation data could add to the bullishness surrounding the greenback this week.