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Asian stock markets fall ahead of US employment update

BEIJING (AP) – Asian shares followed Wall Street lower yesterday ahead of United States (US) jobs data investors hope will persuade the Federal Reserve to ease off plans for more interest rate hikes.

Tokyo, Hong Kong, Seoul and Sydney retreated. Chinese markets were closed for a holiday. Oil prices declined.

Wall Street’s benchmark S&P 500 index fell one per cent on Thursday after a private sector report said US employers hired slightly more workers than forecast in September. That gives ammunition to Fed officials who said more rate hikes are needed to cool the economy and rein in inflation that is at a four-decade high.

US government data due out yesterday are expected to show fewer people were hired compared with previous months. Investors hope that will help persuade the Fed five rate hikes this year are working and it can scale down plans for more.

“What the market seems to be crying out for is a Fed pivot,” said Robert Carnell of ING in a report. “For its part, the Fed is sticking to its ‘higher for longer’ mantra.”

The Nikkei 225 in Tokyo sank 0.7 per cent to 27,116.11 and Hong Kong’s Hang Seng tumbled 1.3 per cent to 17,780.81.

The Kospi in Seoul shed 0.2 per cent to 2,232.84 while Sydney’s S&P ASX 200 lost 0.8 per cent to 6,762.80.

A currency trader at a foreign exchange dealing room in Seoul, South Korea. PHOTO: AP

India’s Sensex opened down 0.6 per cent at 57,900.92. New Zealand and Southeast Asian markets declined.

The Fed and central banks around the world are focused on extinguishing inflation that is running at multi-decade highs, but investors worry their unusually large and rapid pace of rate hikes might tip the global economy into recession.

On Wall Street, the S&P 500 fell to 3,744.52. The index is up 4.4 per cent for the week following its best two-day rally in two-and-a-half years.

The Dow Jones Industrial Average lost 1.1 per cent to 29,926.94. The Nasdaq composite slid 0.7 per cent to 11,073.31.

The yield on US government debt, or the difference between market price and the payout at maturity, widened. That indicates traders expect more rate hikes.

The yield on the 10-year Treasury, which helps set rates for mortgages, rose to 3.81 per cent from 3.75 per cent late Wednesday. The yield on the two-year Treasury rose to 4.22 per cent from 4.14 per cent late on Monday.

Strong US hiring is positive for job hunters but a sign of enduring economic strength, which might make the Fed think more rate hikes are needed.

US government data showed the number of applications for unemployment benefits hit a four-month high last week. That suggests the job market might be cooling.

Forecasters expect the government to report the economy added 250,000 jobs last month, well below the past year’s monthly average of 487,000 but still a strong number despite inflation and two straight quarters of US economic contraction.

In energy markets, benchmark US crude lost USD0.21 to USD88.24 per barrel in electronic trading on the New York Mercantile Exchange. The contract advanced USD0.69 on Thursday to USD88.45. Brent crude, the price basis for trading international oils, shed USD0.25 to USD94.17 per barrel in London. It rose USD1.05 the previous session to USD94.42.

The dollar edged down to JPY145.04 from Thursday’s JPY145.07. The euro declined to 97.70 cents from 97.94 cents.

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