Stock Market Update: Asian Stocks Dip Amid Wall Street Decline and Rising Oil Prices

HONG KONG (AP) — Asian stocks experienced a decline on Monday following the drop in U.S. stock markets. Positive news regarding job growth in the U.S. stirred concerns about potential inflation.

Most markets in Japan were closed for a holiday.

U.S. futures fell while oil prices saw an increase of over $1 per barrel. This surge in oil prices came after the Biden administration imposed additional sanctions on Russia's vital energy sector due to its ongoing conflict in Ukraine. The sanctions, announced last Friday, were described as the most significant against Moscow's oil and liquefied natural gas sectors, which are crucial to Russia's economy.

As a result, U.S. benchmark crude oil prices rose by $1.50, reaching $78.07 per barrel, while Brent crude, the international benchmark, increased by $1.44 to $81.20 per barrel.

In China, latest trade figures showed that exports increased more than expected in December. This increase was in response to factories rushing to fulfill orders before anticipated higher tariffs from U.S. President-elect Donald Trump. Exports grew by 10.7% compared to the previous year, surpassing the 7% growth forecasted by economists. Imports also saw a year-on-year rise of 1%, against expectations for a decrease of 1.5%. As a result, China's trade surplus expanded to $104.84 billion.

Despite this positive economic data, share prices in the region failed to rise. Hong Kong's Hang Seng Index fell by 1.3% to 18,820.46, while the Shanghai Composite Index declined by 0.5% to 3,154.37.

Market sentiment has been jittery, partly due to uncertainty about how Asian economies—especially China—will navigate the potential trade policies of the incoming Trump administration, which is focusing on 'America First' initiatives, according to Stephen Innes of SPI Asset Management.

In Australia, the S&P/ASX 200 index fell by 1.5% to 8,166.40, and South Korea's Kospi index dipped by 1.2% to 2,486.14.

On Friday, the S&P 500 index dropped by 1.5%, closing at 5,827.04, marking its fourth losing week in five. The Dow Jones Industrial Average decreased by 1.6% to 41,938.45, and the Nasdaq composite also fell by 1.6% to finish at 19,161.63.

The stock market movements were influenced by the bond market as bond yields increased significantly after a report indicated that U.S. employers added far more jobs in the last month than economists anticipated.

While robust job growth is a positive sign for workers, it can also intensify inflationary pressures by keeping the economy active. This situation could deter the Federal Reserve from making the interest rate cuts that Wall Street anticipates. Reductions in interest rates are beneficial for stimulating the economy and enhancing investment prices.

Furthermore, the Federal Reserve has already suggested that it will likely ease rates fewer times than previously expected this year due to inflation concerns, particularly amid the possibility of tariffs and other measures that President-elect Trump could implement.

Interestingly, Friday’s job report might not reflect the entire picture, given some weaknesses in manufacturing.

Investors have become cautious after U.S. stock indexes reached numerous records last year, banking on a series of rate cuts from the Federal Reserve. If fewer cuts occur than expected, stock prices may need to decline, or corporate profits must rise significantly to offset this.

Insurance companies have been under pressure due to ongoing wildfires in the Los Angeles area. Many destroyed homes were in high-value areas exceeding $3 million, which could severely impact insurer profits. Notably, Allstate saw a decline of 5.6%, Travelers lost 4.3%, and Chubb fell 3.4%.

In contrast, Delta Air Lines shares increased by 9% after reporting stronger-than-expected profits for the last three months of 2024. The airline highlighted robust travel demand, which it anticipates will continue into 2025.

Additionally, during early trading on Monday, the U.S. dollar weakened against the Japanese yen, dropping to 157.34 from 157.82. The euro also fell to $1.0218 from $1.0244.

stocks, inflation, oil