HONG KONG, Jan 8, (V7N) – Equities fluctuated on Wednesday as Wall Street's sharp decline reverberated across global markets. The drop was triggered by stronger-than-expected US economic and jobs data, which dampened hopes for a quicker pace of interest rate cuts.

The sell-off was exacerbated by inflation concerns tied to former President Donald Trump’s pledges to implement significant tax cuts and loosen regulations when he returns to the White House.

A survey of the US services sector for December revealed stronger activity than anticipated, with the prices index hitting its highest point since January 2024. Additionally, job openings for November surged to a six-month high, underscoring the robustness of the labor market.

These indicators challenge the Federal Reserve’s capacity to continue its rate-cutting cycle, which saw three reductions last year amid easing inflation.

Attention now shifts to Friday's non-farm payrolls report for a clearer picture of the US labor market.

The developments pushed yields on US 10-year Treasuries higher, with projections they could touch 5% for the first time since October 2023. Wall Street reacted negatively, with the Nasdaq and S&P 500 dropping more than 1% each, and the Dow slipping 0.4%.

Tech firms bore the brunt of the losses, notably Nvidia, which faced a sharp decline after a disappointing product reveal.

Asian Markets Mixed

Asian markets followed suit with a mixed start to the day:

Declines: Hong Kong, Tokyo, Shanghai, Wellington, and Taipei.

Gains: Sydney, Singapore, Seoul, and Jakarta.

Stephen Innes, a market strategist, commented, "Recent Fed signals suggest a cautious approach to rate cuts amid a resilient job market and sticky inflation. However, investors are betting against any immediate rate changes, with expectations for a cut before June falling below 50%."

Tokyo - Nikkei 225: Down 0.4% at 39,942.95

Hong Kong - Hang Seng Index: Down 0.4% at 19,368.13

Shanghai - Composite Index: Down 0.1% at 3,226.49

New York - Dow: Down 0.4% at 42,528.36 (Tuesday close)

London - FTSE 100: Down 0.1% at 8,245.28 (Tuesday close)

Euro/dollar: Up at $1.0354

Pound/dollar: Up at $1.2488

Dollar/yen: Down at 157.94 yen

Euro/pound: Up at 82.92 pence

West Texas Intermediate: Up 0.6% at $74.71 per barrel

Brent North Sea Crude: Up 0.5% at $77.40 per barrel

END/BUS/RH/