Asian markets fall in anticipation of U. S. employment report
2023.02.03 03:04
Asian markets fall in anticipation of U. S. employment report
By Tiffany Smith
Budrigannews.com – On Friday, in anticipation of a crucial U.S. non-farm payrolls report, disappointing earnings from U.S. tech giants pushed Asian shares lower and the dollar gained some ground.
After policymakers in Britain and Europe indicated their intention to pause, overnight, markets sensed the end of the massive global tightening cycle, sending local bonds rallying and currencies lower.
Friday’s 0.5% decline in MSCI’s broadest index of Asia-Pacific shares outside of Japan was caused by a 0.9% decline in Chinese bluechips and a 1.2% decline in Hong Kong’s.
Disappointment with Apple and Google’s (NASDAQ:) earnings results likewise, Amazon (NASDAQ:) tempered feelings.
on Friday, slid 0.5%, and Nasdaq futures fell 1.4%.
In Thursday’s after-hours trading, tech shares suffered, with Apple, Amazon, and Google parent Alphabet (NASDAQ:) among those to suffer. all crashing.
That ruined a successful regular trading session on Thursday, when the S&P gained 1.5 percent and the Nasdaq gained 3.3 percent. After Federal Reserve Chair Jerome Powell stated that disinflationary pressures are underway in the economy, raising hopes of an imminent pause in its monetary tightening streak, the rise built on strong gains from the previous day.
Amazon warned that its operating profit could fall to zero in the current quarter, Apple projected another decline in revenue at the start of the year, and Alphabet, the parent company of Google, missed revenue and profit projections for the fourth quarter.
After market losses of more than $100 billion as a result of a report from a short-seller in the United States, investors are also keeping an eye on the consequences of this week’s plunge in shares of the Adani group in India.
The European Central Bank (ECB) and the Bank of England (BoE) each increased interest rates by 50 basis points on Thursday. The BoE stated that the tide was turning against inflation, while the ECB indicated that at least one additional hike was on the horizon before reevaluating its path toward rate hikes.
The ten-year German bunds fell 22.6 basis points to 2.065 percent, the largest drop since 2011, and Italian bonds fell 40 basis points to 3.887%, the most since 2020, as markets hoped that the ECB’s tightening would soon end.
According to Chris Weston, head of research at Pepperstone:
“The wash-up is that the BoE meeting was dovish, and the ECB is now firmly open-minded and data-dependent,” as well as “the Fed chose not to fight the market and the market feels validated by that.”
Deutsche Bank macro strategist Alan Ruskin (ETR:), said that ahead of the U.S. payrolls data, a weaker report would be viewed as supporting all of the favorite trades of the year because of the current price action in the market.
According to Ruskin:
“not to mention it would provide the most important evidence to date to suggest that the market’s rates pricing is more appropriate than the Fed’s own more hawkish signalling.”
Analysts anticipate that the number of jobs added last month will be the lowest since January 2021, that unemployment will remain at 3.6%, and that hourly wage inflation will remain unchanged at 0.3 percent per month, indicating that the robust labor market may have begun to weaken.
Even though futures markets predict that the Federal Reserve will increase interest rates by 25 basis points at its March policy meeting, this could signal the end of the Fed’s current tightening cycle. Additionally, they have budgeted for one rate cut before the year’s end.
The euro fell to $1.0891 in the foreign exchange markets, moving further away from Thursday’s ten-month high of $1.1033.
After falling 1.2% the previous session, the sterling fell to $1.2206 on Friday, the lowest level in more than two weeks.
As a result, the U.S. dollar has recovered most of its losses since the Fed and is currently trading at 101.81, up from its nine-month low of 100.80.
The yields on treasuries largely did not change. The benchmark yield decreased by 2 basis points to 3.3799%, while the two-year yield, which rises as traders anticipate higher Fed fund rates, remained mostly unchanged at 4.0959%.
Futures on the oil market increased by 0.3 percent to $82.41, and U.S. West Texas Intermediate (WTI) crude also gained 0.3 percent to $76.09.
Gold had a slight advantage. was sold for $1916.1 an ounce.
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