Sell-off spurt as resilient US labor market drums hawkish Fed bets, oil recovers

• Asian stocks are facing sheer pressure as upbeat US Employment report has driven hawkish Fed bets.
• Janet Yellen’s visit to China to improve trade relations might strengthen the overall market mood.
• Chances of BoJ’s intervention have increased as the central bank is expected not to exit from its ultra-dovish interest rate policy.

Markets in the Asian domain have witnessed a steep fall after sensing a negative lead from S&P500. US equities faced a sharp sell-off as the robust addition of fresh payrolls in June has uplifted chances of more than one interest rate hike from the Federal Reserve (Fed).

The United States Automatic Data Processing (ADP) agency has reported that payroll figures doubled in June vs. expectations. In June, the US labor market has been flooded with fresh 497K fresh talent, higher than the expectations of 228K and the former release of 278K.

At the press time, Japan’s Nikkei 225 drops 0.53%, China A50 tumbles 0.80%, Hang Seng plunged 1.30% and Nifty50 remained flat.

Apart from the tight US labor market, ISM Services PMI also remained upbeat and added to filters of supporting hawkish monetary policy outlook.

The US Dollar Index (DXY) is expected to remain volatile ahead of the Nonfarm Payrolls (NFP) data, which will release at 12:30 GMT.

Chinese stocks have failed to capitalize on the visit of US Treasury Secretary Janet Yellen to China to avoid a trade war and improve relations. China’s Finance Minister said “We hope the US to take ‘concrete’ actions to create a favorable environment for the healthy development of economic, trade ties between China and US,” as reported by Reuters.

Meanwhile, chances of the Bank of Japan’s (BoJ) intervention in the currency market have increased as the central bank is expected not to exit from its ultra-dovish interest rate policy. BoJ Deputy Governor Shinichi Uchida crossed wires via Japan’s Nikkei news, reported Reuters, and ruled out an early end to the ultra-easy monetary policy while also defending the Yield Curve Control (YCC) policy.

On the oil front, oil prices delivered a V-shape recovery, recovering losses inspired by an upbeat US labor market report. The oil price has climbed to near the crucial resistance of $72.00 and is expected to elevate further as the impact of production cuts announced by Russia and Saudi has not faded yet.