Markets sink as US jobs data fan rate hike bets

HONG KONG - Stock markets sank as forecast-beating US jobs data fanned expectations for another big Federal Reserve interest rate hike, while traders are now focusing on an upcoming inflation report.

A brief rally across trading floors last week gave way to gloom as investors grow increasingly worried that central bank efforts to tame runaway prices will plunge the global economy into recession.

Adding to the stress is the upcoming corporate earnings season, which many fear will show that companies are feeling the pain of tightening monetary policies.

All three main indexes tumbled Friday -- with the Nasdaq off almost four percent -- following news that a net 263,000 US jobs were created in September.

While that was down from August it was more than expected and showed that the labour market remained robust and highlighted the tough job Fed officials face in their battle against four-decade-high inflation. 

With the spotlight on a consumer price index reading later in the week, policymakers continue to take a hawkish tone, warning they will not ease up on their rate hikes even if that means causing a recession.

Asia tracked the US losses, with Hong Kong down more than three percent and hefty selling in Sydney, Singapore, Mumbai, Bangkok, Manila, Jakarta and Wellington. 

Shanghai dropped as traders returned from a week-long holiday, with rising Covid numbers in the country leading to worries of more economically painful lockdowns ahead of a key Communist Party gathering.

London, Paris and Frankfurt all fell at the open.

Tokyo, Seoul and Taipei were closed.

"The sell-off in equities and the rally in the dollar following Friday's US employment report reflects the concern that the hurdle for a Fed pause is high," said SPI Asset Management's Stephen Innes.

"The rising unemployment rate needed to help bring down CPI inflation will require job losses despite the political fallout that is bound to ensue. Regardless, tightening monetary policy until job losses materialize is on the cards."