Asian Stocks Decline Ahead of US Jobs Data: Markets Wrap

(Bloomberg) — Asian stocks fell Friday after muted moves on Wall Street as traders awaited US jobs data that will help illuminate the path ahead for interest rates.

Shares in China and Hong Kong fluctuated while Japan and South Korea fell. Australia pared early declines. US futures held to tight ranges after the S&P 500 closed 0.4% higher, while the Nasdaq 100 added 0.5% on Thursday. The yen fluctuated Friday after four consecutive days of gains.

Declines for Japanese stocks partly reflected a stronger yen, which on Thursday appreciated to its highest level since early December. The gains follow comments from Bank of Japan board member Naoki Tamura, who underscored the case for higher interest rates. The country’s Prime Minister Shigeru Ishiba prepares to meet with US President Donald Trump on Friday.

“Hawkish headlines from Japanese officials on domestic policy rates have created some enthusiasm,” for the yen, while “the dollar has lost its tailwind for now,” said Jerry Minier, co-head of G10 FX trading for Barclays.

Treasuries were steady after small declines across the curve Thursday. An index of the dollar was little changed.

Moves across markets signal a dose of calm ahead of nonfarm payroll figures due later Friday, which will refocus traders away from the drama over tariffs that rattled financial markets earlier in the week. Friday’s jobs report is expected to show 175,000 new roles added to the US economy. A weak print could boost expectations for further Federal Reserve cuts, while a stronger-than-expected number may have the opposite effect.

Separate jobs data released Thursday showed initial jobless claims picked up while labor productivity remained robust. In addition to the employment print Friday, Wall Street will be closely watching a revision to job growth. Economists predict that will be substantial, but probably not as bad as initially estimated.

“The market is going to continue to be a bit direction less,” Amy Xie Patrick, head of income strategies for Pendal Group, said on Bloomberg Television. She is focused on holding quality assets “and looking for safer havens and the ability to move things around,” she said.

Elsewhere, Treasury Secretary Scott Bessent said that his department is conducting outreach to major holders of government securities to get a better picture on their thoughts on the federal debt limit. Bessent also said he favors a strong dollar and has no plans to alter the government’s debt-issuance plans.

Shares in Amazon.com Inc. fell in after-hours trading following earnings results that showed projected profits for the current quarter below analysts’ estimates. The shortfall indicates the company continues to ramp up spending to support artificial intelligence services.

In Asia, data set for release includes outright bond purchases for the Bank of Japan, inflation for Taiwan and a rate decision in India. Consensus forecasts indicate the Reserve Bank of India will cut its benchmark repurchase rate 25 basis points to 6.25%, but some analysts say there is a chance the RBI could cut by twice that amount.

Revision Risk

Every year, the January employment report from the Bureau of Labor Statistics comes with revisions for the 12 months through the previous March. Those adjustments traditionally don’t get much attention. But this week they will, because the agency’s preliminary estimate in August suggested the downward revision would be 818,000 — the largest since 2009.

Economists expect the actual markdown in the January report due Friday will probably come to around 600,000 to 700,000 jobs, which would be somewhat of a relief. The standard monthly jobs data is expected to show payrolls increased by 175,000 last month after advances in excess of 200,000 in the prior two months — which partly reflected recovery from two severe hurricanes. 

For Fed officials, the expected outcome of the January jobs report and the benchmark revisions will likely be consistent with their view that labor demand is moderating, though still strong enough to underpin the economy.

“As long as Friday’s jobs report shows that the economy added 170,000-200,000 jobs during the month, the market should largely absorb this number with little volatility,” said Gaurav Mallik at Pallas Capital Advisors. “If we see a number much stronger than this, it could remove the prospects of any rate cuts this year, and if it’s a number much lower, it could raise worries about a weakening labor market.”

Fed Chair Jerome Powell said last week officials want to see more progress on inflation and would be looking for “serial readings” showing price pressures moving in the right direction.

For now, traders still see the Fed’s next move as a cut — although likely not until mid-year. Treasury yields hit 2025 lows this week.

In commodities, gold was steady after retreating from a record high Thursday, its first decline in six sessions. Oil was little changed after falling Thursday as Trump’s renewed pledge to drive down the price of crude overshadowed his push for tighter Iranian sanctions.

Key events this week:

• US nonfarm payrolls, unemployment, University of Michigan consumer sentiment, Friday
• Fed’s Michelle Bowman, Adriana Kugler speak, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 10:14 a.m. Tokyo time
• Hang Seng futures fell 0.1%
• Japan’s Topix fell 0.2%
• Australia’s S&P/ASX 200 was little changed
• Euro Stoxx 50 futures fell 0.4%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0375
• The Japanese yen was little changed at 151.53 per dollar
• The offshore yuan was little changed at 7.2885 per dollar

Cryptocurrencies

• Bitcoin was little changed at $96,735.56
• Ether fell 0.4% to $2,700.08

Bonds

• The yield on 10-year Treasuries was little changed at 4.43%
• Japan’s 10-year yield was unchanged at 1.275%
• Australia’s 10-year yield advanced one basis point to 4.33%

Commodities

• West Texas Intermediate crude was unchanged at $70.61 a barrel
• Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

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