European stocks and Wall Street futures fell and the dollar strengthened on Monday, after last week’s stronger-than-expected US jobs report raised the likelihood of further interest rate hikes. interest.
Data released on Friday showed the United States added 517,000 jobs in January, well above the 185,000 forecast by Wall Street economists, while the unemployment rate fell to its lowest level in 50 years.
The numbers weighed on financial markets late last week and continued to do so early on Monday. The regional Stoxx 600 in Europe fell 0.5% and the Dax in Germany lost 0.7% ahead of the release of EU retail sales figures in December. London’s FTSE 100, which hit a record high last week, fell 0.6%.
Ahead of the New York open contracts that track Wall Street’s blue-chip S&P 500 and those that track the tech-heavy Nasdaq 100 fell 0.4% and 0.5% respectively. U.S. stocks fell on Friday after the jobs report but gained during the week as the Federal Reserve raised its key rate by a quarter of a percentage point, the smallest amount since March.
“The US jobs data has been shocking” and “makes it more likely that the Fed will continue to climb,” said Steve Englander, strategist at Standard Chartered. Although a measure of dollar strength against a basket of six peers rose 0.3% on Monday, data from Refinitiv shows the currency has fallen 6.3% over the past three months, the US rate hikes slowed.
Englander said the jobs data alone shouldn’t dispel the negative view on the dollar, but “alarming inflation signals” when January figures come out later this month could do the trick. affair. Inflation fell for a sixth consecutive month in December, registering an annual increase of 6.5%.
Government bonds in the United States and Europe sold off along with equities. The yield on the benchmark 10-year Treasury note rose 0.02 percentage points to 3.55% after rising 0.13 percentage points on Friday.
The 10-year German Bund yield added 0.03 percentage point to 2.23%, virtually reversing a decline midway through last week.
Traders initially rushed into government bonds in hopes that the current rate hike cycle was coming to an end, even as the European Central Bank and Bank of England raised rates last week. rate of half a percentage point.
Most Asian stocks fell on Monday as a January rally for Chinese stocks fizzled and US-China tensions deflated sentiment. Hong Kong’s Hang Seng index fell 2%, while China’s CSI 300 lost 1.3%.