Published : 1 month ago, on 01/11/2024

By Stella Qiu

SYDNEY (Reuters) -Asian markets started what could be a momentous month warily, with shares mostly lower and Treasury yields near three-month highs on Friday, while investors wait for U.S. jobs data, although a rate cut next week is largely baked in.

Friday’s nonfarm payrolls report is in focus, ahead of Tuesday’s U.S. presidential election and the Federal Reserve’s policy meeting a day later.

Following their overnight selloff, Nasdaq futures rose 0.5% thanks to a 5.3% jump in Amazon after the bell, which added $104 billion to its market cap. The embattled Intel also surprised with upbeat revenue projections, sending shares up 7% after the close.

That helped both EUROSTOXX 50 futures and FTSE futures inch up 0.1%.

In Asia, Tokyo’s Nikkei fell 2.6% as a stronger yen clouded the outlook for Japanese exporters. The dollar rose 0.3% to 152.46 yen on Friday.

That partly reversed its near 1% decline overnight as less dovish comments from Bank of Japan Governor Kazuo Ueda kept the door open for a year-end rate hike and pushed up the yen.

MSCI’s broadest index of Asia-Pacific shares outside Japan, on the other hand, rose 0.2% thanks to gains in Chinese stocks, but was still down 1.3% for the week.

China’s blue chips gained 0.5% while Hong Kong’s Hang Seng index rose 0.9% after a private sector survey showed factory activity returned to expansion in October.

“The 50.1 level is the smallest possible expansion for the PMI but nonetheless bucks expectations for continued contraction,” said Lynn Song, chief economist, Greater China, at ING.

Moving forward we’ll need to see if the stimulus rollout can lead to a recovery of domestic demand to offset potentially softer external demand picture, which could be even less favourable if we do see a Trump victory next week and a subsequent escalation of tariffs.

Oil extended its rally to a third day, with Brent prices up almost 2% to $74.15 a barrel, on reports that Iran was preparing a retaliatory strike on Israel from Iraqi territory in the coming days. [O/R]

Overnight on Wall Street, shares of Facebook owner Meta Platforms fell 4% and Microsoft sank 6%, as investors feared growing artificial intelligence costs could hit their profits.

Investors are treading warily ahead of the U.S. payrolls data. Economists expect the U.S. economy added 113,000 jobs in October, although risks are skewed to the upside given the private sector survey pointed to strong job gains and jobless claims were lower than expected.

However, hurricanes and strikes have made reading the jobs data tricky. Goldman Sachs expects 95,000 new jobs in October and TD Securities forecast just a 70,000 increase.

Barring any major surprise, a quarter-point rate cut by the Fed is 94% priced in after data showed U.S. consumption remained healthy and inflation gauges pointed to abating price pressures.

In the foreign exchange market, the pound was pinned near 2-1/2 month lows of $1.2891 and British bond yields jumped as investors judged the UK government’s new budget would boost inflation and cause the Bank of England to cut interest rates more slowly.

Treasury yields hovered near three-month highs. The two-year yields have risen 7 basis points this week to 4.172%, just a touch below their three-month high of 4.2180%, while the benchmark 10-year yields are up 5 basis points this week to 4.2726%.

Gold prices climbed 0.5% to $2,756.89, having lost 1.5% overnight.

(Reporting by Stella Qiu; Editing by William Mallard and Sam Holmes)