Volkswacht Bodensee - Stock markets mostly fall as traders trim US rate cut bets

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

Wall Street's main three indices fell further at the start of trading on Monday, although the Dow pushed into positive territory.

The tech-heavy Nasdaq was down 1.4 percent in late morning trading after the United States announced additional export restrictions on AI chip exports.

Shares in tech giant Nvidia, whose chips are prized by firms developing AI applications, fell by 2.9 percent.

Shares in Dutch firm ASML, which makes the machines that create the most advanced chips, slid by 1.9 percent in Amsterdam.

In Europe, London, Paris and Frankfurt finished lower.

In Asia on Monday, 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.

Keenly awaited data on Friday 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 labour 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.

"The robust labour market, along with the recent pickup in inflation, are both making it difficult for the Federal Reserve to justify further rate cuts," said David Morrison, senior market analyst at Trade Nation.

"In fact, some analysts now believe the Fed's next move may be a hike," he added.

Those inflation concerns have seen US bond yields climb higher. Increased borrowing costs tend to weigh on equities as it implies tighter margins and a more difficult sales environment.

"It is evident now that the stock market isn't liking what it is seeing in the Treasury market," said Briefing.com analyst Patrick O'Hare.

He said the release of producer and consumer inflation figures this week "will either soothe or exacerbate the market's inflation concerns".

O'Hare said the earnings of big banks, which begin reporting on Wednesday, will likewise influence concerns about the impact of rising rates on lenders and the economy.

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.

- Key figures around 1630 GMT -

New York - Dow: UP 0.3 percent at 42,075.13 points

New York - S&P 500: DOWN 0.6 percent at 5,792.58

New York - Nasdaq Composite: DOWN 1.4 percent at 18,896.02

London - FTSE 100: DOWN 0.3 percent at 8,224.19

Paris - CAC 40: DOWN 0.3 percent at 7,408.64

Frankfurt - DAX: DOWN 0.4 percent at 20,132.85

Hong Kong - Hang Seng Index: DOWN 1.0 percent at 18,874.14 (close)

Shanghai - Composite: DOWN 0.3 percent at 3,160.76 (close)

Tokyo - Nikkei 225: Closed for a holiday

Euro/dollar: DOWN at $1.0209 from $1.0244 on Friday

Pound/dollar: DOWN at $1.2160 from $1.2210

Dollar/yen: DOWN at 157.63 yen from 157.74 yen

Euro/pound: UP at 83.98 pence from 83.90 pence

Brent North Sea Crude: UP 1.8 percent at $81.23 per barrel

West Texas Intermediate: UP 2.9 percent at $78.79 per barrel

burs-rl/bc

J.Sauter--VB