(Bloomberg) -- Shares in Asia were primed for a mixed opening Friday after selling pressure weakened US stocks and bonds as robust signals from the labor market weighed on expectations for interest rate cuts.
Australian equities opened fractionally higher, while Japan share futures rose slightly, helped along by fresh yen weakness. Contracts for Hong Kong benchmarks slipped, while those for the US inched higher in early Asian trading.
Those moves followed a fourth daily decline for the S&P 500 on Thursday while the tech-heavy Nasdaq 100 dropped for a fifth day — its worst showing since December 2022 — in a sign of selling pressure among last year's winning tech stocks. The losses pushed a gauge of global equities down for a third day.
Treasuries dipped across the curve as investors re-calibrated Federal Reserve rate cut forecasts on strong jobs data. The 10-year yield hit 4% after data showed US companies ramped up hiring in December and jobless claims came in below estimates. The benchmark rate has added about 12 basis points since the start of the year.
"There was nothing within the data that would suggest any urgency from policymakers to begin normalizing rates lower during the first quarter," said Ian Lyngen a strategist at BMO Capital Markets.
Swaps traders now see around a 65% chance the Fed will cut rates by the Fed's March meeting, down from around 85% a week ago. Friday's key US jobs data for December may offer more clarity on the path forward for interest rates. Nonfarm payrolls likely increased by 175,000 last month while the unemployment rate is seen edging up slightly to 3.8%, according to economists polled by Bloomberg.
Veronica Clark, an economist at Citigroup, expects the report to dampen bets on near-term cuts for January and March.
"Even with a recent loosening of financial conditions, risks for monthly job growth still skew more to the downside than upside, and markets are likely to be more reactive to weaker data," she wrote.
The yen lodged its second decline of almost 1% against the greenback on Thursday, pushing the Japanese currency closer toward 145 per dollar. The move followed speculation the Bank of Japan will find it harder to dissolve negative interest rate policy following an earthquake earlier this week.
In Asia, data set for release includes consumer confidence in Japan, inflation for Taiwan, Thailand and the Philippines, and India's 2024 growth forecast.
Traders will also closely watch eurozone inflation and producer prices data to be released later Friday, which will help shape expectations for European Central Bank policy.
Oil prices retreated after a Wednesday rally. West Texas Intermediate fell 0.7% while Brent crude dropped 0.6%. Prices were pressured lower as rising gasoline stockpiles in the US signaled a shaky picture for demand, undercutting the effect of output disruptions in Libya.
In corporate news, Apple Inc tumbled after its second downgrade this week as Piper Sandler flagged concern about iPhone inventory levels. Shares of Endeavour Mining Plc fell in Toronto trading after the firm fired its chief executive officer for serious misconduct. McDonald's Corp. stock also weakened after the fast-food chain said it was being hurt by boycotts in the Middle East.
Key events this week:
- Eurozone CPI, PPI, Friday
- US nonfarm payrolls/unemployment, factory orders, ISM services index, Friday
- Richmond Fed President Tom Barkin — an FOMC voter in 2024 — speaks, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.1% as of 8:18 a.m. Tokyo time
- Nikkei 225 futures rose 0.2%
- Hang Seng futures fell 0.5%
- Australia's S&P/ASX 200 rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0946
- The Japanese yen was little changed at 144.66 per dollar
- The offshore yuan was little changed at 7.1762 per dollar
Cryptocurrencies
- Bitcoin fell 0.3% to $44,343.26
- Ether was little changed at $2,275.77
Bonds
- The yield on 10-year Treasuries advanced eight basis points to 4.00%
- Japan's 10-year yield declined one basis point to 0.610%
- Australia's 10-year yield advanced seven basis points to 4.12%
Commodities
- West Texas Intermediate crude rose 0.2% to $72.33 a barrel
- Spot gold was little changed
- This story was produced with the assistance of Bloomberg Automation.
More stories like this are available on bloomberg.com
