Asian stocks fell as traders turned their attention to US jobs

Asian shares fell after Wall Street traders avoided big bets, with US equity markets set to close ahead of Friday’s jobs report.

Stocks in Tokyo and Sydney fell, with Hong Kong futures also falling. US contracts were lower after Wednesday’s range-bound session for the S&P 500. The tech-heavy Nasdaq 100 was little changed. After-market trading fell after Nvidia Corp. said in a report that the Biden administration plans an additional round of restrictions on exports of artificial intelligence chips.

The S&P 500 reclaimed the 5,900 psychological mark and briefly fell below it. The dollar rose against most of its major currency peers. A solid selloff of $22 billion steadied Treasuries, a slight reprieve after a recent selloff, while Australia’s 10-year yield edged higher in early trading.

The key data in Asia on Thursday will be China’s inflation reading. According to Bloomberg Economics, headline CPI could weaken further while factory-gate prices remained well below year-ago levels. It is a sign that strong government stimulus is yet to lead to a meaningful recovery in demand, BE said.

The options market is betting that 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 Labor Day since September.

U.S. employers likely moderated their hiring last month in anticipation of what economists expect will still be a year of healthy job growth in 2025. Only 26% of respondents thought Friday’s data would be “risk-on,” 40% said “risk-off” and 34% “mixed/negligible.”

“Investors will want to see a return to the Goldilocks data, consistent with a cooling labor market to help temper the recent spike in yields and stabilize stocks,” Tom Esse said in The Sevens Report.

The latest Federal Reserve minutes did not break any significant ground, indicating that officials have taken a new stance on rate-cutting amid elevated price risks, which are set 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.

US stock markets will be closed on January 9 in observance of a day of national mourning for former President Jimmy Carter. The bond market will close at 2 pm New York time.

The yield on 10-year Treasuries was little changed at 4.69% on Wednesday. The 20-year yield, trailing on the US government debt curve after its recovery in 2020, is soon above 5%.

The recent slide in stocks and bonds could worsen as traders worry about the prospect of higher inflation and interest rates, but the decline will peak when markets see their worst year since the global financial crisis in 2022, according to Morgan Stanley. Not likely to reach. Mike Wilson.

The bank’s chief US equity strategist expects an improvement in the first half of 2025 and the second half of the year, he said during an interview with Bloomberg Television on Wednesday. The difference between now and then is that in 2022 the Fed was aggressively raising interest rates at a pace that is unlikely to be repeated in the near future.

Stocks have room for further declines as bond yields approach levels that have been painful for equities in recent years.

“Equity/bond yield correlations have turned negative again,” Goldman Sachs Group Inc. strategists, including Christian Muller-Glissmann, wrote in a note, adding that if yields continue to rise without good economic data, it will weigh on equity markets. “While equities have been relatively resilient during the bond selloff, we think the risk of a near-term correction in the event of negative growth news is somewhat elevated.”