Asian stocks were under pressure on Friday as investors reeled back expectations of an imminent U-turn on US interest rates.
Sketchy data out of China and a muscular dollar also weighed as the region’s markets capped an unspectacular return to business in the first week of the year.
The outlier was Japan where a weakened yen boosted exporters’ fortunes, while financials climbed on the back of a continued hunt for value stocks.
Also on AF: Japan Earthquake Shatters Tourist Town’s Post-Covid Recovery
The Nikkei rose 0.27% to close at 33,377.42 but wrapped up the holiday-shortened week with a 0.26% loss. The broader Topix rose 0.62% to 2,393.54 and jumped 1.15% for the week.
China stocks struggled for direction as traders gauged concerns over the country’s sluggish recovery from the pandemic and signs of deflationary pressure, while government bonds gained on the prospect of more stimulus to revive the economy.
The blue-chip CSI 300 Index lost 0.54%, while the Shanghai Composite Index fell 0.85%, or 25.17 points, to 2,929.18. The Shenzhen Composite Index on China’s second exchange dropped 1.34%, or 24.08 points, to 1,773.42.
Shares of artificial intelligence and defence security both fell more than 1%, while financials and property developers gained roughly 1% each.
In Hong Kong, tech giants lost 1.1%, with e-commerce giant Alibaba down 3%. The benchmark Hang Seng Index lost 0.66%, or 110.65 points, to close at 16,535.33, and the Hang Seng China Enterprises Index dipped 0.75%.
Elsewhere across the region, in earlier trade, Sydney, Mumbai and Jakarta edged up, while Seoul, Taipei, Wellington and Manila dipped. Singapore was flat. MSCI’s broadest index of Asia-Pacific shares outside Japan sagged 0.49%.
Rate Hikes Still on Table: US Fed
The latest catalyst for a paring of Fed rate-cut bets came from more resilient US labour market data on Thursday, putting less pressure on the central bank to ease policy.
Fed officials have sounded more balanced on the risks in recent comments, with Richmond Fed President Thomas Barkin, for one, saying this week that the central bank is “making real progress” towards taming inflation, but “the potential for additional rate hikes remains on the table”.
Traders now see a little better than 2-in-3 odds that the Fed cuts rates by March, down from a 71% probability a week earlier, according to the CME Group’s FedWatch tool.
The release of monthly US payrolls figures looms large later in the day. Overnight, Wall Street’s S&P 500 retreated 0.34%, taking its losses this week to 1.7%, setting up its first weekly decline since late October.
Futures pointed to a further 0.11% drop at the reopen. Pan-European STOXX 50 futures sagged 0.69% and U.K. FTSE futures shed 0.63%.
The dollar last traded 0.42% stronger at 145.25 yen, and touched 145.365 for the first time since December 13.
The US dollar index, which measures the currency against a basket of six major peers including the yen, added 0.18% to 102.61, pushing back towards Wednesday’s three-week high of 102.73. For the week, it is up 1.22%.
Gold Prices Flat
The 10-year Treasury yield rose as high as 4.023%, and was last as 4.0135%, up about 15.5 basis points over the week.
Oil ticked higher following declines on Thursday, when massive weekly gasoline and distillate stock builds overshadowed a larger-than-expected crude stock draw.
Brent crude futures were up 0.55% at $78.02 per barrel, after settling down 0.8% overnight. US West Texas Intermediate crude futures added 0.72% to $72.72 on Friday following a 0.7% decline in the previous session. For the week, Brent is up 1.18%, while WTI has gained 1.38%.
Meanwhile, gold was about flat at $2,043 per ounce, on track to snap a three-week winning streak with a 0.91% slide so far in 2024.
Key figures
Tokyo – Nikkei 225 > UP 0.27% at 33,377.42 (close)
Hong Kong – Hang Seng Index < DOWN 0.66% at 16,535.33 (close)
Shanghai – Composite < DOWN 0.85% at 2,929.18 (close)
London – FTSE 100 < DOWN 0.73% at 7,666.52 (0935 GMT)
New York – Dow > UP 0.03% at 37,440.34 (Thursday close)
- Reuters with additional editing by Sean O’Meara
Read more:
China Pushing Equity Funds to Bolster Slumping Stock Markets
China’s Services Sector Sees Best Growth in 5 Months: Caixin
China Funds Told New A50 Index Best Reflects Economy
Nikkei Dips on Quake Impact, Hang Seng Flat Despite Tech Rally
