(Bloomberg) — Asian equities dropped in early trading following a lackluster session on Wall Street that weighed on tech stocks and bonds, with focus turning to the release of key US inflation data later on Friday.
MSCI Inc.’s gauge for regional shares fell as much as 0.6%, with Japanese indexes leading declines after a strong rally in the previous session. The technology sector was the biggest drag on the regional benchmark. US futures were little changed after the S&P 500 climbed 0.1% in the previous session. The yield on 10-year Treasuries rose three basis points to 4.1% on Thursday, the dollar fluctuated and Bitcoin dropped below $93,000.
Federal Reserve officials will get a dated reading on their preferred inflation gauge, the personal consumption expenditures price index, on Friday. The September income and spending report — also delayed because of the government shutdown — is due to be released as well.
The market moves underscore that risk sentiment remains fragile even as the S&P 500 has rebounded in the past two weeks to be within 0.5% of its record closing high. Those gains partly reflected easing concerns over tech valuations and confidence among traders that the Federal Reserve will deliver a 25-basis point interest-rate cut next week in its last meeting of the year.
“Participants are consciously reducing risk exposure before a key data window,” said Dilin Wu, a strategist at Pepperstone Group. “Even with high odds, PCE still has the power to shift the market’s timing and confidence in the path of rate cuts.”
Friday’s figures will include the PCE index and a core measure that excludes food and energy. Economists project a third-straight 0.2% increase in the core index. That would keep the year-over-year figure hovering just below 3%, a sign that inflationary pressures are stable, yet sticky.
US government bonds were sold off on Thursday as data showed signs of resilience in the jobs market. Applications for US unemployment benefits fell last week to the lowest in more than three years, indicating that employers are still largely holding onto workers despite a wave of recent layoffs.
Separate data from Challenger, Gray & Christmas showed announced layoffs at US companies fell last month after surging in October, but were still the highest for any November in three years. Even so, bets on a Fed reduction remained intact.
“There remain some negative payroll employment readings. But the US labor market is not collapsing based on timely data and reports that have leading indicator properties,” said Don Rissmiller at Strategas. “We continue to believe the Fed will cut the fed funds rate again by 25 basis points in December.”
Policymakers will not yet have the government’s November jobs report in hand for their meeting next week. The report, originally due Dec. 5, was delayed until Dec. 16 as a result of the record-long government shutdown. That release will also include October payrolls figures.
“We continue to expect two rate cuts by the end of the first quarter of 2026, with Friday’s personal consumption expenditure index likely to show price pressures under control,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management.
In Asia, focus today will be on an interest-rate decision in India where a majority of the 44 economists surveyed by Bloomberg expect the central bank to cut its benchmark repurchase rate by a quarter point to 5.25%.
Corporate News
Meta Platforms Inc. shares jumped 3.4% after people familiar with the matter said executives are considering budget cuts for the metaverse group. Australian data center group NextDC Ltd. and ChatGPT-developer OpenAI agreed to partner on the development of a large-scale data center in Sydney. NextDC’s shares jumped. The cloud-computing startup Fluidstack is in talks to raise roughly $700 million in a funding round that would value the company at $7 billion, according to a person familiar with the situation. Mitsubishi UFJ Financial Group Inc. plans to team up with Morgan Stanley in asset management, deepening their 17-year partnership. Jane Street Group’s record haul this year has been boosted by savvy bets on the artificial intelligence boom that are showing up as big gains in its trading results, according to people familiar with the matter. China’s crackdown on borrowing by local governments is forcing state-run entities in even some of the wealthiest provinces to tap costly credit from non-bank lenders, a stopgap that’s building up risks in an opaque corner of the financial system. Nvidia Corp. would be barred from shipping advanced artificial intelligence chips to China under bipartisan legislation unveiled Thursday in a bid to codify existing US restrictions on exports of advanced semiconductors to the Chinese market. Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 9:37 a.m. Tokyo time Hang Seng futures fell 0.2% Japan’s Topix fell 1.1% Australia’s S&P/ASX 200 was little changed Euro Stoxx 50 futures were little changed Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1648 The Japanese yen was little changed at 155.15 per dollar The offshore yuan was little changed at 7.0694 per dollar The Australian dollar was little changed at $0.6607 Cryptocurrencies
Bitcoin rose 0.2% to $92,341.18 Ether rose 0.8% to $3,148.41 Bonds
The yield on 10-year Treasuries was little changed at 4.10% Japan’s 10-year yield was little changed at 1.940% Australia’s 10-year yield declined three basis points to 4.68% Commodities
West Texas Intermediate crude was little changed Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.
–With assistance from Richard Henderson and Winnie Hsu.
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