US Market falls on US-China tensions, rate hike woes

The US stock market finished in negative territory on Monday, 06 February 2023, as risk aversion selloff amid rising Sino-U.S. geopolitical tensions after the U.S. military shot down a suspected surveillance balloon from China.

Also, weighing down market sentiments was hotter than expected U.S. employment data that reinforced expectations the world's largest economy can withstand higher rates for longer this year.

At the close of trade, the Dow Jones Industrial Average index declined 34.99 points, or 0.1%, to 33,891.02. The S&P500 index was down 25.40 points, or 0.61%, to 4,111.08. The tech-heavy Nasdaq Composite Index decreased by 119.50 points, or 1%, to 11,887.45.

Total 9 of 11 sectors ended lower along with the S&P500 Index. Communication services was bottom performing sector, falling 1.31% followed by information technology (down 1.2%), materials (down 1.08%), and real estate (down 0.68%) sectors.

Wall Street markets started the new trading week on a negative note as strong U.S. employment data reinforced expectations the world's largest economy can withstand higher rates for longer this year to bring inflation back to its 2% target.

The Labor Department's closely watched monthly jobs report said non-farm payroll employment soared by 517,000 jobs in January 2023 after surging by an upwardly revised 260,000 jobs in December 2022. The report also said the unemployment rate edged down to 3.4% in January 2023 from 3.5% in December 2022.

Meanwhile, selloff pressure mounted as investors fretted about rising Sino-U.S. geopolitical tensions on news that the U.S. shot down a suspected Chinese spy balloon over the weekend.

U.S. Secretary of State Anthony Blinken postponed his visit to Beijing in a sign of a potential re-escalation of tensions between the United States and China after the U.S. military shot down a suspected surveillance balloon from China. China said it was a stray civilian vessel blown off course, and has vowed to retaliate.

The US has recently moved to limit China's access to advanced semiconductor technology by restricting US companies from exporting their hi-tech goods to mainland China. It has also roped in allies Japan and the Netherlands to restrict the sale of advanced equipment.

Investors will be watching for remarks on Tuesday from Fed Chairman Jerome Powell, who will speak at the Economic Club of Washington. Earnings season presses on Tuesday with results from Chipotle, DuPont and Royal Caribbean.

Among Indian ADR, ICICI Bank declined 0.82% to $20.64, INFOSYS was down 2.4% at $18.82, WNS Holdings declined 1% to $86.95, Dr Reddy's labs sank 0.2% to $52.96, Wipro declined 2.6% to $4.86, and HDFC Bank was down 0.8% at $66.91. Azure Power Global added 0.5% to $4.09.

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