By Gina Lee
Investing.com – Asia Pacific stocks were mostly down on Monday morning, while U.S. futures were down, as bets that the U.S. Federal Reserve will hike interest rates also weighed on bonds.
China’s Shanghai Composite jumped 1.68% by 9:53 PM ET (2:53 AM GMT) while the Shenzhen Component rose 1.38%. Chinese shares resumed trading after the week-long Lunar New Year holiday, and data released earlier in the day showed that the Caixin services purchasing managers index was 51.4 in January.
Hong Kong’s Hang Seng Index fell 0.88%.
Japan’s Nikkei 225 fell 1.07% and South Korea’s KOSPI fell 1.03%.
In Australia, the ASX 200 was down 0.46%, with retail sales data released earlier in the day.
Expectations are now growing that the Fed will hike rates over five times in 2022, thanks to a strong U.S. jobs report. Non-farm payrolls were at 467,000 in January, while the unemployment rate was 4%.
The Fed is in a difficult spot, “trying to manage the real economy where we see that hot inflation and the financial economy, which quivers every time we talk about rate rises,” Bain & Co. global head of macro research Karen Harris told Bloomberg.
Investors now await U.S. inflation data, including the consumer price index, due on Thursday.
In Europe, European Central Bank (ECB) Governing Council Member Klaas Knot said he expects a rate increase as early as in the fourth quarter of 2022. Knot’s comments come after the central bank’s hawkish pivot during the previous week, with President Christine Lagarde no longer excluding a rate hike during the year..
“The momentum trade has been to short bonds, and many are now fearing higher bond yields will really start to bite in equity land,” Pepperstone Financial Pty Ltd. head of research Chris Weston said in a note.
Cleveland Fed President Loretta Mester is due to speak on Wednesday.
Other central banks handing down their policy decisions during the week include the Reserve Bank of India and Bank Indonesia, whose decisions are due on Thursday. U.K. Bank of England Governor Andrew Bailey will also speak on the same day.
Tensions over Ukraine also continue, with U.S. President Joe Biden speaking to his French counterpart Emmanuel Macron about a response to Russia’s troop buildup along its border with Ukraine. Russia denies plans of an attack, however.
Meanwhile, companies including AstraZeneca PLC (LON:AZN), Commonwealth Bank Of Australia (ASX:CBA), GlaxoSmithKline PLC (LON:GSK), Pfizer Inc. (NYSE:PFE), Softbank (OTC:SFTBY) Group Corp. (T:9984), Toyota Motor (NYSE:TM) Corp. (T:7203), Twitter Inc . (NYSE:TWTR), and Uber Technologies Inc . (NYSE:UBER) will release their earnings during the week.