Stocks decline in Asia as jobs takes main focus: markets wrap

Stocks fell in Asia after US equities struggled for direction, with traders awaiting a jobs report later Friday for clues on the Federal Reserve’s next policy steps.

A gauge of Asian equities dropped, led by Japan, where the yen’s five-day rally increased downward pressure on stocks. A Bank of Japan board member suggesting the need for a policy assessment added to negative sentiment.

Futures contracts for the S&P 500 slid after the index edged lower during the US session. It rallied earlier this week on Fed Chair Jerome Powell’s signals of a downshift in the pace of hikes.

Bets on where the central bank rate will peak have now dropped below 4.9%, according to swap markets. The current benchmark sits in a range between 3.75% and 4%.

Fed Bank of New York President John Williams said further hikes are needed to curb inflation. Concern that such tightening raises the odds of a recession became more pronounced after data showing American manufacturing contracted in November for the first time since May 2020.

The Bloomberg Dollar Spot Index steadied after sinking to its lowest since June.

Australian and New Zealand government bond yields slid, following the lead from Treasuries on Thursday, when their rally gathered steam amid a pullback in expectations for Fed tightening. The 10-year US benchmark yield rose slightly to 3.54% during Asian trading.

The remarkably resilient US jobs market is beginning to cool, but Friday’s employment report may fall short of the turning point Fed officials are seeking in their battle to beat back inflation.

Still, Sarah Ponczek, financial adviser at UBS Private Wealth Management, said the jobs figures and other data may start to show a slowing trend in the economy.

“There have been slight hints that the interest-rate hike cycle that we have seen is starting to filter through the economy,” she said on Bloomberg Radio.

In South Africa, the political turmoil risks sending the financial market into deeper rout, with the rand coming off its worst one-day loss since May and yields on the 10-year sovereign bond rising most since 2015.

Elsewhere, oil was set for a weekly gain with China further easing Covid restrictions and the US considering a pause in sales from its strategic reserves. Gold slid.

Key events this week:

• US unemployment, nonfarm payrolls, Friday

Stocks

• S&P 500 futures fell 0.2% as of 1:26 p.m. Tokyo time. The S&P fell 0.1%
• Nasdaq 100 futures fell 0.4%. The Nasdaq 100 rose 0.1%
• Japan’s Topix index fell 1.6%
• South Korea’s Kospi index fell 1.5%
• Hong Kong’s Hang Seng Index fell 0.7%
• China’s Shanghai Composite Index fell 0.3%
• Australia’s S&P/ASX 200 Index fell 0.7%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0524
• The Japanese yen rose 0.1% to 135.13 per dollar
• The offshore yuan was little changed at 7.0448 per dollar

Cryptocurrencies

• Bitcoin was little changed at $16,916.08
• Ether fell 0.3% to $1,272.49

Bonds

• The yield on 10-year Treasuries advanced four basis points to 3.54%
• Japan’s 10-year yield was little changed at 0.25%
• Australia’s 10-year yield declined 10 basis points to 3.38%

Commodities

• West Texas Intermediate crude was little changed
• Spot gold fell 0.3% to $1 796.96 an ounce