Stocks across Asia experienced a decline on Friday, influenced by the drop in US equities, as the market grapples with the uncertainty surrounding interest rates and ongoing geopolitical conflicts.
In the wake of a holiday, shares in Australia and Japan saw a downturn, while the Hong Kong market fluctuated between gains and losses. Trading remained halted in mainland China and Taiwan for a second consecutive day. Meanwhile, futures for US stocks showed minimal changes following a decline in the S&P 500 and Nasdaq 100 indexes.
The Japanese yen strengthened, reaching a two-week peak, fueled by speculation of a potential interest rate increase by the Bank of Japan later in the year. This speculation comes after the yen's significant appreciation against the dollar, which had previously led to conjectures about possible market interventions.
On the global front, oil prices saw a slight increase on Friday. This came after Israeli Prime Minister Benjamin Netanyahu's announcement of proactive measures against Iran and its allies, coupled with President Joe Biden's conditional support for Israel's military efforts based on the protection of civilians.
Market strategist Matt Maley commented on the potential impact of a direct Israel-Iran conflict on oil supply from the Middle East, noting that while it hasn't been a concern so far, the situation could escalate quickly.
Investors are also keenly awaiting the US nonfarm payrolls data, expected to reveal the addition of over 200,000 jobs in March. This could indicate continued economic strength, possibly influencing the Federal Reserve's stance on interest rates.
Minneapolis Fed President Neel Kashkari expressed skepticism about the necessity of rate cuts this year, should inflation progress stall. This sentiment was echoed by several central bank officials ahead of the jobs report release, with Cleveland Fed's Loretta Mester hinting at nearing confidence levels for potential rate reductions in the coming months.
Chris Larkin from E*Trade, part of Morgan Stanley, emphasized the importance of the upcoming jobs report in determining the Fed's next moves, highlighting the market's hope for a balance that neither delays rate cuts nor indicates a significant labor market downturn.
Following gains in Treasuries during New York trading, Australian and New Zealand government bonds also rallied. The 10-year Treasury yield held steady in Asia after a previous session decline.
In the commodities market, gold experienced a slight decrease after hitting a new record earlier in the week, while copper surged to a 14-month high, continuing its upward trajectory amid rising supply concerns.
Major economic and financial events this week include Eurozone retail sales, US unemployment and nonfarm payrolls data, and speeches by Fed officials Michelle Bowman, Thomas Barkin, and Lorie Logan.
Market movements were also noted in stocks, currencies, cryptocurrencies, bonds, and other commodities, with specific changes in futures, yields, and prices reflecting the ongoing economic dynamics.
This coverage was produced with Bloomberg Automation's assistance.
