Asian Stocks Drop as Traders Shift Focus to U.S. Data
Asian stocks fell after Wall Street traders refrained from making big bets, with U.S. equity markets set to close ahead of Friday’s jobs report.
Stocks fell in Tokyo and Sydney, with futures for Hong Kong also down. U.S. contracts slipped, following a range-bound session for the S&P 500 Wednesday. The tech-heavy Nasdaq 100 ended little changed. Nvidia Corp. fell in after-market trading after a report said Biden is planning another round of curbs on exports of artificial intelligence chips.
The S&P 500 reclaimed the psychological 5,900 mark after briefly falling below it. The dollar gained against most of its major peers. Treasury bonds held steady as solid sales of $22 billion brought some relief from the recent selloff, while Australia’s 10-year yield edged up in early trading. The main data in Asia on Thursday is China’s inflation reading. Headline CPI is likely to weaken further while factory-gate prices remain well below year-earlier levels, according to Bloomberg Economics. That’s a sign that stronger government stimulus hasn’t yet spurred a meaningful pickup in demand, BE said. The options market is betting the S&P 500 will move about 1.2% in either direction after the upcoming U.S. jobs data, according to Citigroup Inc. That would be the biggest implied move on a jobs day since September. U.S. employers probably cut hiring last month to cap a year of modest but still healthy job growth that economists expect to continue into 2025. A survey by 22V Research showed most investors are watching payrolls more closely than usual. Only 26% of respondents thought Friday’s data would be “risk active,” 40% said “risk inactive” and 34% “mixed/negligible.”
“Investors want to see a return to Goldilocks data, consistent with a cooling labor market to help temper the recent surge in yields and help stocks stabilize,” said Tom Essaye at The Sevens Report.
The latest Federal Reserve minutes were muted, suggesting officials are adopting a new stance on rate cuts amid rising price risks, opting to move more slowly in the coming months. Meanwhile, Fed Governor Christopher Waller said he believes inflation will continue to cool toward the central bank’s 2% target.
The U.S. stock market will be closed on Jan. 9, a national day of mourning for former President Jimmy Carter. The bond market will close at 2 p.m. New York time. The yield on the 10-year U.S. Treasury note was little changed at 4.69% on Wednesday. The yield on the 20-year Treasury note, which has been the lagging one on the U.S. debt curve since it was reintroduced in 2020, briefly topped 5%.
Source: Bloomberg
