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Asia report: Markets fall after strong US jobs report

Mon 13 January 2025 11:04 | A A A

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(Sharecast News) - Asia-Pacific markets traded lower on Monday as a robust US jobs report dampened expectations for interest rate cuts by the Federal Reserve.

The region's sentiment was further impacted by significant movements in Chinese trade data and a sharp plunge in a New Zealand diagnostics company's shares.

"Asian stocks and bonds fell after strong US payroll data released on Friday, while the pound extended its decline from last week amid concerns over the UK's strained public finances," said TickMill market strategy partner Patrick Munnelly.

"The MSCI regional equities index declined for the fourth straight session as traders recalibrated their expectations for potential Federal Reserve rate cuts in response to the robust US jobs report.

"Futures for both European and US equities pointed to further losses."

Munnelly noted that oil prices surged to a four-month high as new US sanctions on Russia threatened to disrupt supplies, while a measure of the dollar climbed to a two-year high.

"Chinese stocks continued their slide despite domestic data showing record-high exports last year.

"However, this could represent a peak in the nation's trade momentum, with US president-elect [Donald] Trump's plans to impose higher tariffs on Chinese imports when he takes office next week."

Markets in the red after strong US jobs report

China's Shanghai Composite edged down 0.25% to 3,160.76, while the Shenzhen Component was flat, adding just 0.002% to close at 9,796.18.

Notable decliners in Shanghai included Shenzhen Gongjin Electronics, Jiangsu Seagull Cooling Tower, and Liaoning Fu-An Heavy Industry, all of which fell by around 10%.

Hong Kong's Hang Seng Index declined 1% to 18,874.14, weighed down by losses in Haier Smart Home, BYD Electronic International, and MTR Corporation, which dropped 6.83%, 4.73%, and 4.17%, respectively.

In South Korea, the Kospi 100 fell 1.36% to 2,491.46, with semiconductor firms leading the decline.

Hanmi Semiconductor slid 5.31%, SK Hynix dropped 4.52%, and Samsung Heavy Industries lost 4.49%.

Australian markets also faced significant pressure, with the S&P/ASX 200 shedding 1.23% to 8,191.90.

Premier Investments led the declines, tumbling 15.92%, while financial technology firm Netwealth Group and mining services company NRW Holdings also posted steep losses of 9.94% and 9.45%, respectively.

New Zealand's S&P/NZX 50 slipped 0.53% to 12,827.33.

Pacific Edge plunged 52.24% after US Medicare provider Novitas confirmed it would cease coverage of the company's flagship bladder cancer diagnostic test, Cxbladder, effective 23 February.

The company indicated it could still appeal the decision.

Other notable losers in Wellington included Westpac Banking Corporation, down 3.55%, and KMD Brands, which dropped 2.27%.

In currency markets, the dollar was last down 0.26% on the yen, trading at JPY 157.32, as it strengthened 0.01% against the Aussie to AUD 1.6270, and advanced 0.18% on the Kiwi, changing hands at NZD 1.8023.

Oil prices bucked the broader trend, with Brent crude futures climbing 1.84% on ICE to $81.23 per barrel, and the NYMEX quote for West Texas Intermediate rising 2.13% to $78.20.

Japan's markets were closed for the Coming of Age Day holiday.

China trade performance tops forecasts in December

In economic news, China's trade performance in December exceeded forecasts, reflecting continued resilience in exports despite concerns over potential tariff hikes.

Exports surged 10.7% year-on-year in dollar terms, significantly outpacing the 7.3% growth anticipated by Reuters polling.

That marked an acceleration from November's 6.7% rise and follows October's 12.7% spike.

Imports also showed unexpected strength, rising 1.0% from a year earlier and reversing declines in the previous two months.

Analysts had predicted a 1.5% contraction, following drops of 3.9% in November and 2.3% in October.

For the full year, China's exports in renminbi terms increased 7.1% from 2023, a notable improvement from the prior year's 0.6% growth.

Imports climbed 2.3% in 2024, recovering from a 0.3% decline in the previous year.

Officials credited stimulus measures for bolstering demand in the industrial sector, while exporters reportedly frontloaded shipments amid tariff concerns.

Meanwhile, the People's Bank of China pledged to maintain currency stability, emphasising the importance of keeping the yuan exchange rate at a "reasonable and balanced level".

In a statement following a regulatory meeting, the central bank and other agencies committed to managing foreign exchange market risks and preventing excessive currency fluctuations.

Looking ahead to the rest of the week, the Bank of Korea was set to hold its policy meeting on Thursday, while Australia would release its December unemployment rate the same day.

On Friday, China will unveil fourth-quarter GDP figures, along with data on retail sales and industrial output, providing further insights into the health of its economy.

Reporting by Josh White for Sharecast.com.

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