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Asian markets fluctuate after mixed US jobs report

Asian equities swung Monday following a mixed US jobs report that left investors weighing the chances of another Federal Reserve interest rate hike.

Global markets endured a volatile time last week, with traders spooked by a range of issues including a US rating downgrade, rising Treasury yields and a lack of concrete measures to boost Chinese growth.

While inflation continues to come down in the United States and parts of the economy are showing signs of slowing, there is plenty of speculation that the Fed will lift rates at least once more this year.

A much-anticipated jobs report Friday showed fewer-than-forecast new posts were created last month, playing into the view that the central bank could stand pat.

The cheer was offset by a still-strong read on wage growth, which backed up the hawkish outlook for more tightening, with Bloomberg reporting traders see a 40-percent chance of another hike this year.

In the medium term, they still see 1.25 percentage points of cuts by the end of 2024.

The debate was also taking place at the central bank, with Chicago Fed boss Austan Goolsbee saying officials had to be patient and that he was optimistic inflation can be brought down without sparking a recession.

He added that the question should be how long borrowing costs are kept at elevated levels, pointing out “if you hold at 5.25 percent, 5.5 percent, five-and-whatever while inflation goes down, that is a restrictive environment”.

“Holding is increasing restrictiveness in that sense.”

However, Governor Michelle Bowman said policymakers might need to lift again to achieve stability in prices.

And Win Thin, at Brown Brothers Harriman and Co, warned: “As we’ve pointed out before, the easy part is getting from eight percent (inflation) to four percent; the hard part is getting it from four percent to two percent.

“Because of this, we believe the markets continue to underestimate the Fed’s capacity to tighten.”

Investors will be keeping a close eye on fresh US inflation data this week as well as jobless claims figures, hoping for a better idea about the Fed’s plans.

Wall Street’s three main indexes ended Friday in the red, having suffered a late pullback from the morning’s rally.

And Asian investors struggled to get the week off to a positive start, with many markets fluctuating.

Tokyo was flat, while Hong Kong, Shanghai, Sydney and Wellington slipped. Singapore, Taipei, Manila and Jakarta all rose.

Oil prices were barely moved but held Friday’s rally after Ukraine carried out a drone attack on a Russian tanker in the Black Sea at the weekend, fuelling unease about supplies from the major producer, as well as rising costs.

“Freight rates will be ballooning next week as the risks of carrying anything across the Black Sea proliferate,” Viktor Katona, at market intelligence firm Kpler Ltd, said.

He added that the price of transporting crude to India could surge by up to 50 percent.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: FLAT at 32,190.31 (break)

Hong Kong – Hang Seng Index: DOWN 0.1 percent at 19,514.74

Shanghai – Composite: DOWN 0.5 percent at 3,270.35

Euro/dollar: DOWN at $1.1000 from $1.1012 on Friday

Pound/dollar: DOWN at $1.2745 from $1.2748

Euro/pound: DOWN at 86.30 from 86.35 pence

Dollar/yen: UP at 142.03 yen from 141.77 yen

West Texas Intermediate: DOWN 0.1 percent at $82.77 per barrel

Brent North Sea crude: DOWN 0.1 percent at $86.20 per barrel

New York – Dow: DOWN 0.4 percent at 35,065.62 (close)

London – FTSE 100: UP 0.5 percent at 7,564.37 (close)

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