(Bloomberg) — Asian stocks were headed for early declines Monday after strong US jobs data led traders to rethink the path ahead for Federal Reserve interest rate cuts.
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Equity futures for Australia and Hong Kong fell, indicating further pressure on a gauge of the region’s shares that’s dropped in the prior three sessions. Japan’s market is closed for a holiday Monday. US stocks and Treasuries tumbled after Friday’s report, with the S&P 500 falling 1.5% and the Nasdaq 100 losing 1.6%. The 10-year yield closed seven basis points higher at 4.76%, a level not seen since 2023.
Australian and New Zealand bond yields also climbed early Monday. The dollar traded within tight ranges after strengthening against most major currencies on Friday, pushing an index of greenback strength to a two-year high. The yen was an outlier, clawing back a recent decline against the dollar following signs Bank of Japan officials are likely to discuss raising their inflation outlook at a policy meeting later in January.
Selling in stocks and renewed vigor for the dollar reflect the caution that has marked the opening weeks of the year as traders remain uncertain about the pace of Federal Reserve cuts and inflation.
Elsewhere, options traders are preparing for the pound to tumble as much as 8% more as fiscal woes that prompted a painful selloff across UK markets last week weigh on the currency.
In Asia, data set for release Monday includes December trade data for China and inflation for India. Separate figures on China’s December money supply may also be released at any time through January 15.
Economic data for China will offer investors further evidence of the challenges facing the world’s second largest economy. Chinese stocks are facing their worst start to a year since 2016 after falling more than 5% in the first seven trading sessions of 2025.
Strong Jobs
Investors will shift their focus to signs of US inflation in data to be released this week, with the consumer price index report released on Wednesday. They’ll also be watching the New York Fed’s one-year inflation expectations due Monday, producer prices on Tuesday and jobless claims on Thursday.
The data will provide further clarity on the US economy after Friday’s blow-out nonfarm payroll figures. US employment in December advanced by the most in nine months and the unemployment rate unexpectedly fell, capping another year of resilience in the labor market. The data supported the idea US rates may stay put for the foreseeable future, a prospect suggested by a handful of Fed officials over the past week.
Following Friday’s jobs data, economists at some big banks revised their forecasts for additional Fed rate cuts.
Bank of America Corp., which previously expected two quarter-point reductions this year, no longer expects any, and said there’s a risk the next move is a hike. Citigroup Inc. — whose rate-cut outlook is among Wall Street’s most hopeful — still looks for five quarter-point cuts, but says they’ll start in May. Goldman Sachs Group Inc. sees two cuts this year versus three.
“Investors may want to brace themselves for more volatility as the market recalibrates expectations for fewer cuts,” said Gina Bolvin at Bolvin Wealth Management Group.
In corporate news, Johnson & Johnson is exploring a bid to acquire Intra-Cellular Therapies Inc., people familiar with the matter said. Bain Capital sweetened its bid for Australia’s Insignia Financial Ltd. as takeover activity heats up for the wealth manager.
JPMorgan Chase & Co.’s Jamie Dimon said that tariffs, if properly used, can help resolve issues such as unfair competition and national security.
In commodities, oil settled at a three-month high Friday as the US ratcheted up sanctions against Russia, adding to a run of bullish developments that have propelled crude to a strong start to 2025.
Key events this week:
China trade, Monday
India CPI, Monday
ECB Chief Economist Philip Lane and Governing Council member Olli Rehn speak in Hong Kong, Monday
Argentina CPI, Tuesday
US PPI, Tuesday
New York Fed President John Williams speaks, Tuesday
Bank of Japan Deputy Governor Ryozo Himino speaks, Tuesday
Eurozone industrial production, Wednesday
France CPI, Wednesday
UK CPI, Wednesday
US CPI, Wednesday
Chicago Fed President Austan Goolsbee, Minneapolis Fed President Neel Kashkari speak, Wednesday
ECB Governing Council Member Francois Villeroy de Galhau speaks, Wednesday
Australia unemployment, Thursday
Germany CPI, Thursday
Italy trade, CPI, Thursday
Poland rate decision, Thursday
South Korea rate decision, Thursday
UK industrial production, Thursday
US initial jobless claims, retail sales, import prices, Thursday
Bank of America, Morgan Stanley earnings, Thursday
TSMC earnings, Thursday
China GDP, property prices, retail sales, industrial production, Friday
Eurozone CPI, Friday
US housing starts, industrial production, Friday
Some of the main moves in markets:
Stocks
Currencies
The euro was little changed at $1.0241
The Japanese yen was little changed at 157.81 per dollar
The offshore yuan was little changed at 7.3619 per dollar
Cryptocurrencies
Bitcoin fell 0.5% to $93,904.01
Ether fell 0.8% to $3,239.84
Bonds
This story was produced with the assistance of Bloomberg Automation.
