Global Markets Take a Hit as Job Market Strength Fuels Inflation Concerns
The global stock market retreated on Monday, following a decline in US stocks on Friday. The S&P 500 futures dropped 0.9%, while the Dow Jones Industrial Average futures lost 0.4%. This downturn was largely attributed to the strong job market report, which sparked concerns about inflation.
Oil Prices Surge Amid Sanctions on Russia
Oil prices experienced a significant surge, with US benchmark crude oil rising $1.48 to $78.06 per barrel, and Brent crude increasing $1.38 to $81.14 per barrel. This increase was triggered by the Biden administration’s expansion of sanctions against Russia’s energy sector, which is a critical component of the country’s economy.
European Markets Feel the Pinch
In early European trading, Germany’s DAX declined 0.7% to 20,074.11, while the CAC 40 in Paris fell 0.7% to 7,379.02. Britain’s FTSE 100 dropped 0.4% to 8,217.34. Markets in Japan were closed for a holiday.
China’s Export Growth Fails to Boost Stocks
China reported a 10.7% annual growth in exports for December, exceeding expectations. However, this positive news failed to boost the region’s stocks. Hong Kong’s Hang Seng dropped 1% to 18,874.14, while the Shanghai Composite lost 0.3% to 3,160.76.
Uncertainty Over Trump’s Trade Policies Weighs on Markets
The uncertainty surrounding the incoming Trump administration’s ‘America First’ trade policies is adding to the skittish sentiment in the market. According to Stephen Innes of SPI Asset Management, this uncertainty is particularly concerning for Asian economies, especially China.
Australian and South Korean Markets Take a Hit
Australia’s S&P/ASX 200 dipped 1.2% to 8,191.90, while South Korea’s Kospi shed 1% to 2,489.56.
US Jobs Report Sparks Inflation Concerns
Friday’s jobs report, which showed a significant increase in hiring, has sparked concerns about inflation. While this news is positive for workers, it could keep upward pressure on inflation, potentially dissuading the Federal Reserve from cutting interest rates.
Federal Reserve’s Rate Cut Expectations
The Fed has already indicated that it may ease rates fewer times this year than expected, due to worries about higher inflation. This could impact stock prices, which may need to fall or profits at companies would have to rise more strongly to compensate.
Currency Markets React
In other dealings on Monday, the US dollar fell to 157.41 Japanese yen from 157.82 yen, while the euro dropped to $1.0196 from $1.0244.
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