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Global stocks fall amid worries over interest rate, US-China tensions

The dollar surged against its major peers after the strong US jobs data fanned bets on more Federal Reserve interest rate hikes. ©AFP

New York (AFP) - Stock markets slid and the dollar firmed Monday after the latest round of robust US economic data fanned expectations of more Federal Reserve interest rate hikes.

Adding to the downbeat mood were geopolitical concerns after the United States shot down a suspected Chinese spy balloon that had floated across the country for days.

China voiced anger on Sunday at the shooting down of the balloon, which it insists was an unmanned weather surveillance aircraft that veered off-course.

This came as equity market rallies enjoyed through January have largely stopped as investors contemplate an extended period of high borrowing costs, aimed at bringing inflation down from multi-decade highs.

And Friday's blowout US jobs report has raised the question of what the Fed is going to do next, said Hugh Johnson of Hugh Johnson Economics. 

The worry is that "the Federal Reserve policy is not going to change into anything like a pause or a reduction anytime soon," Johnson said. 

Friday's jobs data came two days after Fed Chair Jerome Powell sent less hawkish signals about future interest rate hikes after acknowledging progress in the battle on inflation.

Powell is due for another public appearance on Tuesday. 

Wall Street indices spent most of the day in the red, with the S&P 500 ending down 0.6 percent.

London's benchmark FTSE 100 index, which hit an all-time high on Friday, fell 0.8 percent on Monday.

"Having hit a new all-time high..., the FTSE 100 opened the new trading week with a hangover," noted Russ Mould, investment director at AJ Bell.

"Throwing cold water over the party were stronger than expected jobs figures in the US, something closely monitored by the Federal Reserve when making interest rate decisions," he said.

Eurozone stock markets were also down, as were leading indices in Asia.

Oil prices, meanwhile, pushed higher as Iraqi Kurdistan said it was suspending oil exports through Turkey as a precaution after a deadly earthquake rocked its northern neighbor and Syria.

The autonomous Kurdish region of northern Iraq usually exports around 450,000 barrels of oil a day through Turkey.

Dell became the latest tech industry firm to announce job cuts, shedding five percent of its workforce or around 6,650 positions.Its shares closed around three percent lower in New York.

In Asia on Monday, Mumbai stocks slipped again with embattled tycoon Gautam Adani's troubled empire suffering more big losses.

Flagship Adani Enterprises gained more than 1,000 percent in five years before a rout begun last week on allegations of fraud at India's biggest conglomerate.

Key figures around 2115 GMT

New York - Dow:  DOWN 0.1 percent at 33,891.02 (close)

New York - S&P 500: DOWN 0.6 percent at 4,111.08 (close)

New York - Nasdaq: DOWN 1.0 percent at 11,887.45 (close)

London - FTSE 100: DOWN 0.8 percent at 7,836.71 (close) 

Frankfurt - DAX: DOWN 0.8 percent at 15,345.91 (close)

Paris - CAC 40: DOWN 1.3 percent at 7,137.10 (close)

EURO STOXX 50: DOWN 1.2 percent at 4,205.45 (close)

Tokyo - Nikkei 225: UP 0.7 percent at 27,693.65 (close)

Hong Kong - Hang Seng Index: DOWN 2.0 percent at 21,222.16 (close)

Shanghai - Composite: DOWN 0.8 percent at 3,238.70 (close)

Euro/dollar: DOWN at $1.0728 from $1.0795 on Friday

Pound/dollar: DOWN at $1.2020 from $1.2056

Euro/pound: DOWN at 89.22 pence from 89.54 pence

Dollar/yen: UP at 132.65 yen from 131.19 yen

Brent North Sea crude: UP 1.3 percent at $80.99 per barrel

West Texas Intermediate: UP 1.0 percent at $74.11 per barrel


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