The Turkish lira sank more than three percent against the dollar after President Recep Tayyip Erdogan fired the head of the central bank, fuelling speculation that borrowing costs will be cut soon (OZAN KOSE)

London (AFP) – Stock markets retreated Monday following strong US jobs data that reduced pressure on the Federal Reserve to cut interest rates sharply.

Losses on Asian markets were far steeper than in Europe, because investors there had already gone home for the day on Friday when the employment data from the world’s biggest economy were released and were only catching up on Monday.

The dollar was steady against its main rivals, while oil prices flattened.

However, the greenback surged more than three percent against the Turkish lira after President Recep Tayyip Erdogan sacked the head of the country’s central bank following months of tensions over high borrowing costs.

Erdogan, who is battling to boost Turkey’s struggling economy, has repeatedly railed against high interest rates and called for them to be lowered to stimulate growth.

The removal of Murat Cetinkaya at the weekend fuelled speculation that the Turkish central bank would slash borrowing costs.

On the corporate front, shares in Deutsche Bank eased 0.3 percent to 7.15 euros, a day after Germany’s biggest lender said it would cut 18,000 jobs by 2022.

The bank said the layoffs would reduce annual costs by six billion euros ($6.7 billion) over the same period, adding that it would stop almost all activity in shares trading.

In the US meanwhile, Labor Department data Friday showed that despite recent disappointing indicators, the world’s top economy remains resilient as it created far more posts than expected in June.

The news took traders by surprise and sent Wall Street falling ahead of the weekend, having hit record highs last week ahead of the jobs numbers.

Investors had been hoping that the Fed would cut US borrowing costs by as much as half a percentage point at its next policy meeting later this month, but the report on Friday reduced those chances.

“Markets remain convinced the Fed will cut rates at the end of the month,” said OANDA senior market analyst Edward Moya.

“But the strong labour market has many questioning whether we will see just two rate cuts in 2019 and not what some call the required three to see US stocks make another… push higher into uncharted territory.”

Moya said that the focus would now turn to the congressional testimony of Fed boss Jerome Powell this week, with investors hoping he will provide some forward guidance on the bank’s plans.

Also up this week is the release of minutes from the Fed’s June meeting, while US and Chinese officials are working to schedule top-level trade talks.

– Key figures around 1045 GMT –

London – FTSE 100: DOWN 0.1 percent at 7,544.20 points

Paris – CAC 40: DOWN 0.2 percent at 5,584.66

Frankfurt – DAX 30: DOWN 0.1 percent at 12,553.58

EURO STOXX 50: DOWN 0.1 percent at 3,523.80

Tokyo – Nikkei 225: DOWN 1.0 percent at 21,534.35 (close)

Hong Kong – Hang Seng: DOWN 1.5 percent at 28,331.69 (close)

Shanghai – Composite: DOWN 2.6 percent at 2,933.36 (close)

New York – Dow: DOWN 0.2 percent at 26,922.12 (close)

Euro/dollar: DOWN at $1.1223 from $1.1227 at 2030 GMT Friday

Dollar/yen: FLAT at 108.50 yen from 108.50 yen

Pound/dollar: UP at $1.2530 from $1.2525

Brent North Sea crude: UP six cents at $64.29 per barrel

West Texas Intermediate: DOWN four cents at $57.47 per barrel

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Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.