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Monday, September 26, 2022
Stocks & Shares

Asia stocks lower following strong US jobs data

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Shanghai Composite Index fell 1.1% to 3,191.00, Nikkei 225 shed 0.5% to 28,063.06, Hang Seng sank 0.4% to 19,867.17, Kospi gained 0.7% to 2,467.38 and S&P-ASX 200 shed 0.2% to 6,984.10

Asian stocks followed Wall Street lower Wednesday after strong U.S. jobs data fuelled expectations of further interest rate hikes and Chinese manufacturing activity weakened.

Shanghai, Tokyo, Hong Kong and Sydney declined.

U.S. government data Tuesday that showed there were two jobs for every unemployed person in July appeared to support arguments the economy can tolerate more rate hikes to tame inflation that is running at multi-decade highs. Some investors had hoped the Federal Reserve would back off due to indications economic activity is cooling.

The jobs data ‘supported the argument for the Fed to stick to an aggressive stance,’ said Edward Moya of Oanda in a report.

The Shanghai Composite Index fell 1.1% to 3,191.00 after an index of manufacturing showed activity contracted again in August.

The Nikkei 225 in Tokyo shed 0.5% to 28,063.06 and the Hang Seng in Hong Kong sank 0.4% to 19,867.17.

The Kospi in South Korea gained 0.7% to 2,467.38 after July factory output declined 1.3% compared with the previous month.

Sydney’s S&P-ASX 200 shed 0.2% to 6,984.10. New Zealand advanced while Singapore and Indonesia declined. Indian markets were closed for a holiday.

Investors worry rate hikes by the Fed and other central banks in Europe and Asia to extinguish an inflation surge might derail global economic growth.

Chair Jerome Powell indicated the Fed will stick to its strategy of rate hikes. The Fed has raised rates four times this year. Two of those were by 0.75 percentage points, three times the usual margin.

Traders appear to expect a 0.75 percentage-point hike in September, a half-point in November and 0.25 points in December, according to Moya.

If the labour market doesn’t break and the consumer remains resilient, Wall Street might start pricing in rate hikes for February and March, Moya wrote.

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