Stocks slide in Asia, dollar steady as inflation, earnings expand By Reuters

(Refiles to fix the salary report history link in paragraph 1)

By Wayne Cole

SYDNEY (Reuters) – Asian stocks edged lower on Monday as the dollar held near 14-month highs after an unequivocal payrolls report pushed up bond yields and tested equity valuations high just as and the season of profits begins.

The impact of the employment report on the outlook for US tax rates also raised Wednesday in the price of consumer prices where any increase in the heart greater than the forecast of 0.2% would threaten to close the door to a full workout.

Not helping was a spike in oil prices to four-month highs amid signs of weaker crude shipments from Russia as Washington stepped up sanctions on the country.

Markets have already scaled back expectations for Federal Reserve rate cuts to just 27 basis points through 2025, with the terminal level now seen around 4.0% compared to the 3.0% many had hoped for. time last year.

“Given such strong data, we now expect the Fed to cut rates only once this year, by 25bp in June,” said Christian Keller, head of economic research at Barclays (LON:).

“We still expect the FOMC to proceed with a cut in June, as we expect the economy to slow down in the coming quarters and inflation to continue to decline in H1, before rates lead to some firming in inflation in H2 “.

At least five Fed officials are scheduled to speak this week and offer their reaction to the jobs surprise, with the influential president of the New York Federal Reserve, John Williams, appearing on Wednesday.

The hawkish turn on rates lifted yields on 10-year Treasuries to a 14-month high of 4.79%, and they last traded at 4.764% in Asia.

Higher yields on risk-free bonds raise the discount bar for corporate earnings and make debt relatively more attractive compared to stocks, cash, property and commodities.

They also raise borrowing costs for businesses and consumers, and that’s before President-elect Donald Trump’s proposed tariffs inflate import prices.

This could test optimism around corporate earnings as the season kicks off with major banks on Wednesday, including Citigroup (NYSE: ), Goldman Sachs and JPMorgan.

STERLING BEAR’S EYE

A holiday in Japan made for thin early trading on Monday and MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.4%.

At the close, futures traded at 38,770 compared to a cash close of 39,190.

South Korean stocks fell 0.2%, with the political situation still in flux as a Constitutional Court hearing begins on Tuesday to decide whether impeached President Yoon Suk Yeol will be removed from office or restored.

In China, trade figures for December are due later on Monday followed by data on gross domestic product, retail sales and industrial production on Friday.

and Nasdaq futures were both off 0.1%, after Friday’s pullback.

The inexorable rise in Treasury yields boosted the dollar across the board and saw the euro fall for eight straight weeks to slide to $1.0240, just above its lowest since November 2022. (USD/ )

The dollar was steady at 157.84 yen, although off a six-month high of 158.88 amid reports that the Bank of Japan could revise its inflation forecasts this month as a prelude to hiking rates again.

Sterling was stuck near a 14-month low at $1.2202, with sentiment exacerbated by a recent rout in the gilt market on concerns the Labor government would have to borrow more to finance spending commitments. (GBP/)

Britain’s finance minister, Rachel Reeves, promised on Saturday that she would act to ensure that the government’s tax rules were respected.

Gold prices held steady at $2,688 an ounce, having proved surprisingly resilient in the face of a stronger dollar and higher bond yields. (GOAL/)

Oil prices continue to climb on supply concerns as Russia’s seaborne exports hit the lowest since August 2023, even before the latest round of US sanctions. (O/R)

it jumped $1.43 to $81.19 a barrel, while it jumped $1.50 to $78.07 a barrel.