Asian stocks sink after US jobs data hurt hopes of rate cut

BEIJING (AP) — Asian stocks tumbled yesterday after unexpectedly strong United States (US) employment data tempered hopes the Federal Reserve might cut interest rates.

Benchmarks in Shanghai, Tokyo, South Korea and Hong Kong all declined.

Fed leaders have said they are ready to cut rates to support economic growth amid a tariff war with Beijing. But investors questioned whether the Fed might think that is needed after last Friday’s data on June job creation.

Those data “have many questioning whether we will see just two rate cuts in 2019 and not what some call the required three” to push US stocks higher, said Edward Moya of OANDA in a report.

Trade data due out this week from several countries and Fed Chairman Jerome Powell’s testimony to Congress tomorrow “will likely highlight the effects of the trade war and should support the calls for additional stimulus globally,” said Moya.

A currency trader stands by the screens showing the foreign exchange rates at the foreign exchange dealing room in Seoul. – AP

The Shanghai Composite Index fell 2.5 per cent to 2,936.97 and Tokyo’s Nikkei 225 lost one per cent to 21,520.70. Hong Kong’s Hang Seng retreated 1.6 per cent to 28,301.77 and Seoul’s Kospi declined 1.8 per cent to 2,072.60.

Australia’s S&P-ASX 200 gave up one per cent to 6,682.60 and India’s Sensex was down 1.1 per cent at 39,079.63. Taiwan, New Zealand and Southeast Asian markets also declined.

Wall Street fell last Friday after the Labor Department said employers added 224,000 jobs in June. That was better than forecast and a rebound from May’s disappointing weaker-than-expected job creation.

The benchmark Standard & Poor’s 500 index lost 0.2 per cent to 2,990.41. The Dow Jones Industrial Average dropped 0.2 per cent to 26,922.12. The Nasdaq composite slid 0.1 per cent to 8,161.79.

The Fed holds its next policymaking meeting at the end of the month. The panel will reveal whether it has decided to cut rates for the first time since the Great Recession in 2008 in the face of slowing economic momentum around the world.

Last year, Fed officials raised rates four times, in part to stave off the risk of high inflation and in part to try to ensure that they would have room to cut rates if the economy stumbled.