San Francisco Frontiers - Markets mixed as US jobs data give Fed room to hike rates

US traders took flight after the closely watched non-farm payroll figures Friday, which showed a slowdown in hiring but still with more new posts created than expected.

That came as more officials suggested the Federal Reserve could continue lifting borrowing costs sharply as they try to rein in inflation.

However, with prices being driven higher by factors ranging from the Ukraine war to China's lockdown-induced slowdown, there are fears the bank's measures could deal a blow to the world's biggest economy.

The jump in inflation has forced finance chiefs around the world to tighten monetary policy, with the European Central Bank indicating it will raise rates in July for the first time in more than a decade.

"The critical issue for markets is whether inflation can be brought under control by central banks without generating a recession," Shane Oliver, head of investment strategy and chief economist at AMP Capital, said in a note.

"Shares are likely to see continued short-term volatility as central banks continue to tighten to combat high inflation, the war in Ukraine continues and fears of recession remain."

All three main indexes on Wall Street ended deep in the red, with tech firms taking most of the pain, though Asia fared a little better Monday.

Hong Kong, Tokyo, Shanghai and Taipei all rose, but there were losses in Sydney, Mumbai, Singapore, Manila, Bangkok and Jakarta.

London, Paris and Frankfurt rose at the open.

Diana Mousina, of AMP Capital, said: "Positive news around Chinese economic activity and cheaper equity valuations could offer value from a long-term investment perspective, but volatility will remain high in the short-term."

Traders took some heart from a wind down of Covid containment measures that have crippled the world's number two economy for months.

With infections trending down in major cities including Shanghai and Beijing, authorities have allowed some sense of normality to return, raising hopes for a pick-up in consumer activity.

"The expectations for economic recovery is rising as Beijing and Shanghai try best to resume work and production," Meng Shen, of investment bank Chanson & Co, said.

Adding to the upbeat mood were comments from US commerce chief Gina Raimondo that she was considering lifting tariffs on some goods from China to help in the battle against inflation.

Oil prices -- a key driver of inflation -- continued to rise, as a pledge by OPEC and other major producers to boost output fell short of what markets had hoped for.

The increase came as Saudi Arabia also said it had hiked the official selling price for customers in Asia, while demand expectations rose on the back of the easing of some Covid lockdown measures in China and the start of the US summer driving season.

- Key figures at around 0720 GMT -

Tokyo - Nikkei 225: UP 0.6 percent at 27,915.89 (close)

Hong Kong - Hang Seng Index: UP 1.5 percent at 21,405.99

Shanghai - Composite: UP 1.3 percent at 3,236.37 (close)

London - FTSE 100: UP 0.9 percent at 7,600.01

Brent North Sea crude: UP 0.7 percent at $120.57 per barrel

West Texas Intermediate: UP 0.7 percent at $119.66 per barrel

Euro/dollar: UP at $1.0723 from $1.0719 on Thursday

Pound/dollar: UP at $1.2527 from $1.2488

Euro/pound: DOWN at 85.60 pence from 85.81 pence

Dollar/yen: DOWN at 130.51 yen from 130.81 yen

New York - Dow: DOWN 1.0 percent to 32,899.7 (close)

-- Bloomberg News contributed to this story --

E.Jones--SFF