On Monday, Asian stock markets saw a small drop, and the U.S. dollar remained strong after a surprising jobs report showed more people got hired in the U.S. This increase in jobs means bond interest rates went up and made investors rethink the value of stocks as earnings season begins.
Investors are now carefully watching upcoming U.S. inflation data. If prices go up more than expected, it could signal fewer interest rate cuts coming from the Federal Reserve (Fed) in the future. Currently, investors expect the Fed to cut rates by just one time in June by 0.25%. Some Fed officials will speak this week, including important figures like John Williams from the Fed Bank of New York, to discuss the strong jobs report.
As interest rates rise, U.S. 10-year Treasury bond yields reached their highest level in 14 months. This means that safer bond investments look more appealing than stocks, which can be riskier. Businesses might also face higher borrowing costs.
In Asia, Japan was closed for a holiday, which made trading quieter. The Asia-Pacific stock index fell by 0.4%. In South Korea, stocks dipped slightly, and political events surrounding the president kept things uncertain.
China is set to release trade data, and the S&P 500 and Nasdaq futures slipped by 0.1% following a drop last Friday.
The rising bond yields have made the dollar stronger, pushing the euro down for eight weeks in a row to around $1.0240. The dollar is also steady against the Japanese yen, while the British pound is facing issues, trading near $1.2202. This is due to worries about the British government’s spending.
Gold prices have remained stable despite a stronger dollar, sitting at about $2,688 an ounce. Oil prices also continued to rise due to supply concerns, with Brent crude reaching $81.19 a barrel and U.S. crude at $78.07.
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