Asia shares slip as U.S. jobs stunner hammers bonds

A man wearing a protective face mask amid the coronavirus disease (COVID-19) outbreak, looks at an electronic board displaying Japan’s Nikkei Index outside a brokerage in Tokyo, Japan, September 24, 2021. REUTERS/Kim Kyung-Hoon

SYDNEY, Feb 7 (Reuters) – Asian share markets mostly eased on Monday after stunningly strong U.S. jobs data soothed concerns about the global economy but also added to the risk of an aggressive tightening by the Federal Reserve.

Geopolitics also remained a worry as the White House warned Russia could invade Ukraine any day and French President Emmanuel Macron prepared for a trip to Moscow. read more

The cautious mood saw MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) dip 0.3%. Japan’s Nikkei (.N225) fell 0.8% and South Korea (.KS11) 0.4%.

China returned from the Lunar New Year break with jumps in equities and commodities, with the blue-chip CSI300 (.CSI300) and Shanghai Composite (.SSEC) both up 1.6% and 2% respectively and metals and iron ore rallying in Shanghai.

Hong Kong’s Hang Seng (.HSI), which returned from the break on Friday, fell 0.4%.

S&P 500 futures and Nasdaq futures both steadied, after last week’s market turmoil saw Amazon.com Inc gain almost $200 billion while Facebook-owner Meta Platforms Inc (FB.O) lost just as much. European futures and FTSE futures each rose roughly 0.5%.

BofA analyst Savita Subramanian noted company guidance for 2022 had weakened significantly with most stocks falling following earnings reports.

“Commentaries suggested worsening labour shortages and supply chain issues, with a bigger headwind expected in Q1 than in Q4,” Subramanian said in a note. With wages being the biggest cost component for companies, margin pressure was set to continue.

The January payrolls report showed annual growth in average hourly earnings climbed to 5.7%, from 4.9%, while payrolls for prior months were revised up by 709,000 to radically change the trend in hiring. read more

“The report not only indicated that payrolls were way more than anyone could have imagined, but there was exceptional strength in earnings which has to add growing concern among Fed officials about upward pressure on inflation,” said Kevin Cummins, chief U.S. economist at NatWest Markets.

Consumer price figures for January are due on Thursday and could well show core inflation accelerating to the fastest pace since 1982 at 5.9%.

As a result, markets moved to price in a one-in-three chance the Fed might hike by a full 50 basis points in March and the real prospect of rates reaching 1.5% by year end.

That sent two-year yields up 15 basis points for the week, the biggest rise since late 2019 and they touched a nearly two-year high of 1.331% in Asia on Monday.

In currency markets, the euro pulled back slightly from highs made last week in the glow of a newly hawkish European Central Bank as markets brought forward the likely timing of a…