(Bloomberg) — Shares in Asia were headed for early declines Friday after US stocks fell, as interest rate uncertainty and geopolitical tensions weighed on sentiment.
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Equity futures for Japan and Australia declined. Hong Kong markets resume trading after a holiday, while mainland China and Taiwan will be closed for a second day. The S&P 500 index ended 1.2% lower, while the tech-heavy Nasdaq 100 index, which is more sensitive to interest rate expectations, fell 1.6% on Thursday.
Australian and New Zealand government bonds rallied early Friday tracking gains for Treasuries in New York trading. The 10-year Treasury yield fell four basis points to 4.31%.
The moves presage US nonfarm payrolls data due later Friday that is expected to show more than 200,000 new roles added to the economy in March — a further sign of robust activity that may lead the Fed to keep rates higher for longer.
Federal Reserve Bank Minneapolis President Neel Kashkari said Thursday that rate cuts may not be needed this year if progress on inflation stalls. He was among the more than a half-dozen central bank officials speaking ahead of the data release. Meanwhile, Cleveland Fed counterpart Loretta Mester suggested the central bank could be getting close to the level of confidence it needs to begin lowering interest rates in the next few months.
“As always, the monthly jobs report will have the final say,” said Chris Larkin at E*Trade from Morgan Stanley. “Investors will be looking for a ‘Goldilocks’ number that won’t give the Fed any reason to delay rate cuts, but also doesn’t suggest the labor market is taking a serious downturn.”
Brent crude topped $90 a barrel as Israeli Prime Minister Benjamin Netanyahu said at a security cabinet meeting his country will operate against Iran and its proxies and will hurt those who seek to harm it. President Joe Biden told Netanyahu on a call that US support for his war would depend on new steps to protect civilians.
“If we get a direct conflict between Israel and Iran, that’s something that will likely restrict the supply of oil coming from the Middle East,” said Matt Maley at Miller Tabak + Co. “That has not been an issue up until now, but it could become one very quickly.”
An index of the dollar ended little changed Thursday. Currency markets were largely muted in early Friday trading with the yen standing pat at 151 per dollar. Earlier, the Japanese currency had rallied the most in nearly a month, pulling back from levels that traders speculated would spark Japanese intervention.
Bank of Japan Governor Kazuo Ueda said further certainty about reaching the central bank’s inflation target would be needed before decisions are made on rate hikes.
In commodities, gold inched lower Thursday after touching a fresh record earlier in the week. Copper rallied to the highest in 14 months, extending a rally that began in February in the bellwether industrial metal in response to rising supply risks.
Key events this week:
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Eurozone retail sales, Friday
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US unemployment, nonfarm payrolls, Friday
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Fed’s Michelle Bowman, Thomas Barkin and Lorie Logan speak, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures rose 0.1% as of 7:07 a.m. Tokyo time
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Hang Seng futures were unchanged
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S&P/ASX 200 futures fell 0.8%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0839
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The Japanese yen was little changed at 151.24 per dollar
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The offshore yuan was little changed at 7.2495 per dollar
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The Australian dollar was little changed at $0.6589
Cryptocurrencies
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Bitcoin fell 0.4% to $67,693.55
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Ether fell 0.3% to $3,316.53
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.
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