Despite positive economic indicators, including a surprise increase in China's exports and strong job growth in the U.S., markets reacted negatively. Investors are concerned about the potential for the Federal Reserve to maintain a hawkish stance in response to the strong labor market.
This report is from today's CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe. \The unemployment rate ticked down to 4.1% from 4.2% in November. Economists expected the rate to stay the same in December. The market reacted negatively after the expectation-busting jobs report for December was released, putting major U.S.
indexes in the red in the year to date. Asia-Pacific stocks, tracking Wall Street's losses. Despite China posting a surprise increase in exports for December, the CSI 300 lost around 0.5%, extending Friday's losses when it closed at its lowest level since September 2024. \Chinese imports rose 1.0%, reversing the previous two months' contraction. That's higher than the 7.3% growth expected in a Reuters poll and November's 6.7% increase. But potential tariff hikes by the U.S. might slow down trade. \Meanwhile, India's government announced on Tuesday that it would eliminate its third-party fact-checking was seen as an attempt to appease U.S. President-elect Donald Trump. In other news, the U.S. government's potential ban on TikTok violates the free speech rights of its millions of users in the U.S., which means the app could disappear from app stores as soon as this week. \Inflationary pressures continue to weigh. December's job additions were 100,000 more than expected by Dow Jones consensus estimates. Investors worried that the Fed may stay hawkish in response to the hot labor market. The market-implied probability of just a single cut this year. Bond yields, which have already been elevated in recent weeks, jumped further on the release of the jobs report. The Fed might not be as worried about a robust labor market this time. On the contrary, strong jobs growth probably reassures it, considering that concern over the employment rate was one of the reasons why the Fed decided on a jumbo rate cut in July. \Goolsbee also noted that inflation over the past six months has been around 1.9%, or just below the Fed's target. And economic growth ultimately means the potential for better earnings, less risk of a recession, and that's really going to dictate longer term returns versus a sell-off in today's market,' Adam Turnquist, chief technical strategist at LPL Financial, said. Good news need not always be bad news for markets.
JOB GROWTH CHINA EXPORTS FED MARKETS INFLATION
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