Across Asia, the financial decisions made in boardrooms and on trading floors are beginning to ripple into the lives of everyday people, from the cost of filling a gas tank to the stability of a retirement account. Asian stock markets were mixed ahead of U.S. jobs data that might influence Federal Reserve plans for more interest rate hikes to cool surging inflation, a move that could directly impact borrowing costs for families and businesses. Shanghai and Seoul advanced while Tokyo and Hong Kong retreated, reflecting a cautious mood among investors.
The Shanghai Composite Index added 0.1% to 3,189.09, while the Nikkei 225 in Tokyo lost 0.2% to 27,604.37. The Hang Seng in Hong Kong sank 0.8% to 19,443.49.
The Kospi in Seoul advanced less than 0.1% to 2,417.25, and Sydney’s S&P-ASX 200 declined less than 0.1% to 6,844.80. New Zealand and Jakarta gained while Singapore declined. Oil prices rose more than $1.50 per barrel, adding to concerns for commuters and businesses already grappling with higher energy costs.
U.S. crude oil rose to $88.26 per barrel in electronic trading on the New York Mercantile Exchange, after the contract tumbled from $2.94 to $86.61 on Thursday. Brent crude, the price basis for international oil trading, gained $1.64 to $94 per barrel in London, following a plunge of $3.28 the previous session to $92.36 a barrel.
Jobs Data Holds Key to Future Hikes
Investors looked ahead to U.S. data on August hiring to see how the economy is responding to four earlier hikes to cool inflation that is at a four-decade high. A strong reading would give ammunition to Fed officials who say higher interest rates are needed to slow economic activity and reduce upward pressure on consumer prices. For many people, this translates directly into higher costs for mortgages, car loans, and credit card debt.
If the figures show more than 300,000 jobs were added in August, it “could likely reinforce further lean towards” a rate hike as big as 0.75 percentage points at this month’s Fed meeting, said Yeap Jun Rong of IG in a report. The Labor Department reported that there were two jobs for every unemployed person in July, giving ammunition to Fed officials who argue for rate hikes.
On Thursday, it reported unemployment claims fell last week in another sign of a strong job market. On Wall Street, the benchmark S&P 500 index rose 0.3% to 3,966.85, rebounding from a four-day string of declines. It ended August with a 4.2% loss after surging the previous month on expectations the Fed might ease off rate hikes due to signs U.S. economic activity was cooling and inflation might be leveling off.
Those hopes were dashed last week when chair Jerome Powell said the Fed needs to keep rates elevated enough “for some time” to slow the economy. The only question for many investors is how much and when the next hike will be.
The Dow Jones Industrial Average finished up 0.5%. In currency markets, the dollar rose to 140.32 yen from Thursday’s 140.23 yen, while the euro gained to 99.60 cents from 99.45 cents, reflecting ongoing shifts in global trade and personal purchasing power. Looking ahead, all eyes remain on the U.S. jobs report due later this week, as it will provide the clearest signal yet of whether the Fed will press forward with another large rate hike, shaping the economic landscape for households and businesses in Asia and beyond.
