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Asian Markets Mixed As Strong US Jobs Data Boosts Rate Hike Bets

Asian markets were mixed Monday as another strong jobs report provided some reassurance that the recovery in the US economy remained on track but also solidified expectations for more aggressive Federal Reserve interest rate hikes.

The gains were helped by another drop in oil prices after the 31-nation International Energy Agency agreed to tap its vast reserves to offset the removal of Russian exports, while the start of a ceasefire in Yemen eased concerns over supplies from the region.

Officials said Friday that the world’s top economy added 431,000 positions in March while the unemployment rate fell to just slightly above pre-pandemic levels.

The figures showed that while inflation has surged to a 40-year high and the Ukraine war has fanned uncertainty, the recovery continues.

The economy’s resilience will be taken as further evidence that the economy could withstand a sharper rise in interest rates to bring prices under control, with many observers now predicting a half-point hike in May.

However, expectations that rates will continue to go up have seen Treasury yields surge with commentators saying there were warning signs that growth will slow as the year progresses.

“It would not be surprising to see yields rise further from here and it is very hard to know where they will land,” Angela Ashton, of Evergreen Consultants, noted.

“Markets are volatile and there is every chance they will overshoot.”

A positive close on Wall Street was followed by a broadly upbeat start to the week in Asia.

Hong Kong led gains thanks to a rally in tech firms after Beijing removed a rule preventing US authorities from inspecting the audits of Chinese companies listed in New York.

The announcement came after a drawn-out row between the two countries with Washington saying Chinese firms could be delisted by 2024 if they do not comply with audit requirements.

The demand put at risk more than 200 companies including ecommerce titans Alibaba and and Tencent.

Singapore, Sydney and Seoul also rose, though Tokyo, Manila and Jakarta struggled.

Crude extended Friday’s losses — with WTI holding below $100 — after IEA members including the United States, Japan the European Union pledged to dip into stockpiles to shore up tight supplies caused by Russia’s invasion of Ukraine.

The grouping made the promise at an emergency ministerial meeting, having already announced last week a plan to release more than 60 million barrels.

That came a day after Joe Biden said he would release a record 180 million barrels onto the market over six months.

Meanwhile, there was also some cheer from news of a 60-day ceasefire in Yemen’s six-year civil war, which has seen several attacks on Saudi facilities that have hit output from the world’s biggest producer.

Still, analysts said that while markets equity and crude markets have shown some stability after the wild swings seen at the start of the Ukraine war, uncertainty continued to act as a drag and traders remained nervous.

“Risk sentiment over the past week has been inconsistent,” said SPI Asset Management’s Stephen Innes.

“Market signals could be characterised by a repetitive cat-and-mouse game whereby headlines initially emerge around the progress in ceasefire talks before being typically walked down by Russian officials who deny the odds of any close peace deal.