The lack of clarity about the US data and timing of interest rate hike have put further pressure on Asian stock markets. Several Asian stocks slipped into pressure on Friday trading ahead of the US data jobs report. Japan's Nikkei fell 1.7 percent for the week. The long holiday stretch for Chinese markets also resulted in sluggishness in the Asian market.
interest rate
Giving much wider scope of speculation on possible interest rate hike in next October meeting, the US Federal Reserve Chair Janet Yellen has indicated that there would be interest rate hike this year. Yellen further opined that it's necessary to increase short-term rates in a gradual manner as the improvement in labor market further continues and inflation rate reaches to the government target of two percent. The US Central Bank has been sending feelers about the possible rate hike this year for some time. The job market growth is the major factor that puts the US Fed in a comfortable position to take a decision on interest rate hike.
The market analysts, economists say that current situation is favoring the US Fed to take a decision on interest rate hike. The improvement in the labor market in low-income jobs is giving much-needed support to the US Fed.
The latest projects indicating job gains in August are giving a much wider scope for US Fed rate hike speculation. According to research firms, non-farm payrolls were up 220,000 in August from 215,000 in July. Unemployment rate is also at 5.2 percent indicating near seven-and-a-half-year low.
The stock markets last week witnessed shifting of priorities to gold and money markets funds as high volatility make equity markets uncertain following the steep fall of over nine percent on Chinese market on opening day of the week Monday. This has led to record outflows from equity funds during the week.
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Based on the July jobs data, the United States may be headed for an interest rate hike, a sign the economy is in good health.
China's top securities brokerages said on Saturday that they would collectively buy at least 120 billion yuan ($19.3 billion of shares in a bid to stabilize the country's stock markets after a slump of nearly 30 percent since mid-June.
U.S. stocks closed down slightly on Thursday after the International Monetary Fund warned Greece ahead of its Sunday referendum that it faces a huge financial hole, and mixed jobs data dampened the U.S. economic outlook.
Stock investors are expected to tread carefully next week, as speculation about the timing of a U.S. Federal Reserve interest rate hike adds to concerns about valuations.
The Reserve Bank of India won't cut its key interest rate again until the final quarter of the year as it waits to see how the monsoon season affects food prices, a Reuters poll found.
China's new home prices fell for the eighth consecutive month in April from a year earlier but were flat from March, adding to hopes that a property downturn which is weighing heavily on the economy is beginning to bottom out.
China's interest rate cut kept shares worldwide near record highs on Monday, though euro zone bourses, bonds and the euro were pegged back by a lack of progress in resolving Greece’s financing woes.