MARKETS: Asian stock markets fall, the euro weakens – expectations of a US interest rate cut were delayed

Asian stock markets are mostly down. The background is Friday’s US labor market report, which unexpectedly showed strong new job creation and a decrease in unemployment.

The labor market therefore does not need monetary stimulus. The strong report also confirms that there is still inflationary pressure in the economy. Consequently, expectations of future interest rate cuts by the US Federal Reserve have been reduced and delayed.

“The report also created pressure on the markets of developing countries. While three to four interest rate cuts were priced in before Trump’s election victory, now only one interest rate cut is expected,” ING Bank’s China Economist Lynn Song assessed to Bloomberg.

Future inflation expectations have also been affected by the rise in oil prices. The price of Brent reference oil rose by two percent in the morning

In the morning MSCI Asia Pacific was down around 1.1 percent early in the morning. The Japanese market is closed on Monday. In the morning before eight, Hong Kong’s Hang Seng was down 1.2 percent. Mainland China’s CSI 300 was down 0.4 percent and Korea’s Kospi was down 1.1 percent.

In China, data was published about stronger than expected exports in December, but the share price was still falling on average. According to market comments, the Chinese market expects more information about possible stimulus measures.

At the same time as the expectation of interest rate cuts in the United States is diminishing, the European Central Bank is still expected to cut interest rates rapidly. This is reflected in the downward trend of the euro. In the morning, the euro was down 0.2 percent against the dollar. If the trend continues, the down day will be the Fifth in a row.

At 8:00 a.m., the euro fetched $1.0220, 160.87 yen, 0.84133 pounds or 11.499 Swedish kronor. The dollar was 157.41 yen and the pound was 1.2148 dollars.