Asian markets largely recorded losses on Monday, influenced by positive U.S. job data and Jerome Powell, Federal Reserve Chair's somewhat aggressive comments. These factors led investors to reduce their expectations of interest rate cuts for the year. The increase in the dollar and bond yields led to a drop in investors' appetite for risk. For the second consecutive day, gold was sold off, while escalations in the Middle East pushed oil prices up.
The biggest losers were the Chinese markets, with the Shanghai Composite dropping by 1.02% to 2,702.18. This loss came after a change in the reserve ratio for banks and a private survey indicated a slight dip in the activity of China's service sector in early 2024. As some major shareholders of large companies face margin calls, China's securities regulator announced that it would forcefully monitor to prevent risks emanating from pledged shares.
The Hang Seng in Hong Kong decreased by 0.15% to 15,510.01, recovering some initial losses after Donald Trump, the former U.S. President, stated he would re-impose tariffs on China if re-elected in the upcoming November presidential election.
In Japan, the markets saw improvements following the expansion of service activity in December, which was faster than the previous month. The Nikkei average and the Topix index saw increases of 0.54% and 0.67% respectively. Automakers and other export-oriented stocks topped the gainers list, buoyed by a weaker yen.
South Korea's Kospi average and Australian markets saw drops of 0.92% and 0.95% respectively, the former ahead of the upcoming Lunar New Year and the latter in anticipation of the Reserve Bank of Australia's interest rate decision. Significant stock movements also occurred among gold miners, with Silver Lake Resources dropping 11.5% and Red 5 adding 3% following a merger agreement. Evolution Mining and Northern Star experienced losses of 4.6% and 3.8% respectively.
New Zealand's S&P/NZX 50 index recorded a marginal decrease, and the U.S. markets rallied on the back of positive earnings reports from Amazon and Meta Platforms, as well as gathering momentum in job creation. The U.S. economy added 353,000 jobs in January, far above the expected 180,000 increase. As a result, investors pulled back their expectations for interest rate cuts this year. The Dow and the S&P 500 saw increases of 0.4% and 1.1% respectively, with both reaching record closing highs. The tech-focused Nasdaq Composite jumped 1.7%.
