Stock markets fell and the dollar strengthened on Monday, as the latest batch of strong US economic data fueled expectations of further Federal Reserve rate increases.
Geopolitical concerns were added to the gloomy tone when the US shot down a suspected Chinese surveillance balloon that had been floating around the country for days.
China expressed outrage on Sunday at the shooting down of the balloon, which it claims was an unmanned weather monitoring aircraft that deviated from its trajectory.
This comes as equity market rallies that began in January have mostly stalled as investors prepare for a prolonged period of high borrowing costs aimed at lowering inflation from multi-decade highs.
And, according to Hugh Johnson of Hugh Johnson Economics, Friday’s massive US employment data has raised the issue of what the Fed will do next.
The concern is that “the Federal Reserve policy will not transform into anything resembling a pause or a decrease very soon,” according to Johnson.
Friday’s jobs report comes two days after Fed Chair Jerome Powell signaled less hawkishness about future rate increases after conceding progress in the fight against inflation.
Powell is scheduled to speak in public again on this week.
The S&P 500 ended down 0.6 percent after spending most of the day in the red.
The FTSE 100 index in London dipped 0.8 percent on Monday after reaching an all-time high on Friday.
“After setting a fresh all-time high…, the FTSE 100 began the new trading week with a hangover,” said Russ Mould, investment director at AJ Bell.
“Stronger-than-expected employment growth in the United States, which the Federal Reserve constantly monitors when making interest rate decisions, threw cold water on the party,” he added.
Eurozone stock markets fell, as did key Asian indexes.
Meanwhile, oil prices increased as Iraqi Kurdistan announced it was stopping oil shipments through Turkey as a precaution following a catastrophic earthquake that shook its northern neighbor and Syria.
The autonomous Kurdish area of northern Iraq typically exports around 450,000 barrels of oil per day via Turkey.
Dell is the latest computer company to announce job layoffs, laying off 5% of its staff, or around 6,650 employees. In New York, its shares closed almost 3% down.
Mumbai stocks fell again on Monday, with beleaguered tycoon Gautam Adani’s struggling business suffering further significant losses.
Adani Enterprises, India’s largest conglomerate, had risen more than 1,000% in five years before a collapse began last week on allegations of fraud.
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