Bets on Fed cuts trimmed; marts fall

Asian and European markets slid Monday after traders trimmed bets on US Federal Reserve rate cuts and oil extended a rally sparked by new sanctions on Russia’s energy sector.

An outsized US jobs report Friday dealt another blow to hopes for more interest rate cuts in 2025, and was followed by hefty losses on Wall Street.

Philippine shares slid below the 6,400 level as the sentiment was pulled down from the Friday night performance of the US, which saw its economy’s latest employment figures crush estimates.

For the rest of the week, the key economic data to watch includes the December Consumer Price Index (CPI), set for release on Wednesday morning.

Ahead of that, investors will analyze the December Producer Price Index (PPI) report, scheduled for Tuesday.

Hong Kong and Shanghai stocks fell but pared initial losses as data showed Chinese exports and imports topped forecasts in December.

Tokyo’s stock market was closed for a holiday. In Europe, London, Paris and Frankfurt also dropped.

256-K jobs created

Keenly awaited data showed the US economy created 256,000 jobs last month, a jump from November’s revised 212,000 and smashing forecasts of 150,000-160,000.

“Given a resilient labor market, we now think the Fed cutting cycle is over,” said Bank of America’s Aditya Bhave and other economists.

It follows data last week that pointed to a rise in inflation expectations, and adds to concerns that president-elect Donald Trump’s plans to slash taxes, regulations and immigration will reignite prices.

Surging oil prices added to unease, with both main contracts extending Friday’s gains -- after the United States and Britain announced new sanctions against Russia’s energy sector, including oil giant Gazprom Neft.

“The spike in oil prices could pose additional challenges for central banks, particularly the Federal Reserve, if it leads to higher inflation,” said Patrick Munnelly, partner at broker Tickmill Group.

However, analysts do not expect prices to spike too much in the longer term as global oil production is expected to meet demand.

On currency markets, the pound was wallowing around lows not seen since the end of 2023 owing to fading hopes for US rate cuts as well as worries about the British economy.

The euro struggled at its weakest level since November 2022.