Asian shares faced volatility on Monday as a robust US jobs report dashed hopes for an imminent interest rate cut from the Federal Reserve. China’s securities regulator pledged to prevent abnormal market fluctuations, but investor sentiment in Chinese stocks remained low. Meanwhile, oil prices surged due to fresh US strikes on Iran-aligned factions in Iraq, Syria, and Yemen. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.21%, while China’s blue-chip index rebounded 1% after touching a five-year low. The focus remains on the Fed’s stance, with markets now pricing in an 80% chance of the central bank maintaining rates in March, up from 33% at the start of the year.
The dollar strengthened, reaching an eight-week peak against major rivals, and Treasury yields rose after a strong US jobs report that showed accelerated job growth in January. Fed Chairman Jerome Powell indicated the central bank’s cautious approach to interest rate cuts, emphasizing the need to balance the risk of moving too soon or too late. Geopolitical tensions in the Middle East contributed to rising oil prices, with US crude at $72.58 per barrel and Brent at $77.75. European bourses looked set for a muted open, reflecting the cautious global sentiment amid uncertainties in the economic landscape.