Asian markets mixed ahead of US data, expected Fed rate cut

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Asian markets struggled into the weekend on Friday following a bland lead from Wall Street as a mixed bag of US data did little to move the needle on expectations that the Federal Reserve will cut interest rates next week.

Investors have, in recent sessions, struggled to match last week’s healthy gains, fuelled by comments from central bank officials indicating their preference for a further easing of monetary policy.

However, optimism has been helped by reports reinforcing the view that the jobs market is softening, including payroll firm ADP saying more than 30,000 posts were lost in November.

And while figures Thursday on jobless claims and layoffs came in slightly better than expected, markets have priced the chances of a rate cut on Wednesday at around 90 percent.

Focus is now on the release later Friday of the personal consumption expenditures (PCE) index, the Fed’s preferred gauge of inflation, with a below-forecast reading tipped to ramp up hopes for several more rate reductions in 2026.

Data on income and spending is also due to come out.

Still, debate continues to swirl over the bank’s plans for the next 12 months as inflation remains stubbornly above target.

“While the US labour market is showing signs of slowing with the latest ADP report seeing a decline in hiring, there is a sense that it is still reasonably resilient,” said Michael Hewson at MCH Market Insights.

With key jobs creation data not due until after the Fed’s decision, “any further move to cut rates by another 25 basis points could well be a leap of faith on the part of some members of the committee”, he wrote.

He warned that “markets are pricing in the likelihood of another cut, which means any delay could prompt a significant adverse reaction”.

“Of course, there is another scenario where the Fed cuts rates, but then signals a pause as it looks to assess the effect that three successive rate cuts have had on the US economy.”

Wall Street ended on a tepid note, with the S&P 500 and Nasdaq slightly higher but the Dow marginally off.

Tokyo shed more than one percent, having jumped more than two percent on Thursday, while Hong Kong, Shanghai, Singapore and Wellington were also off. Sydney, Seoul, Taipei, Manila and Jakarta edged up.

In corporate news, Chinese artificial intelligence chip maker Moore Threads Technology soared more than 450 percent on its debut in Shanghai after raising $1.13 billion in an initial public offering.

– Key figures at around 0230 GMT –

Tokyo – Nikkei 225: DOWN 1.1 percent at 50,465.14 (break)

Hong Kong – Hang Seng Index: DOWN 0.5 percent at 25,800.74

Shanghai – Composite: DOWN 0.2 percent at 3,868.09

Euro/dollar: UP at $1.1652 from $1.1648 on Thursday

Pound/dollar: DOWN at $1.3330 from $1.3335

Dollar/yen: UP at 155.08 yen from 155.03 yen

Euro/pound: UP at 87.40 pence from 87.00 pence

West Texas Intermediate: DOWN 0.3 percent at $59.52 per barrel

Brent North Sea Crude: DOWN 0.1 percent at $63.17 per barrel

New York – Dow: DOWN 0.1 percent at 47,850.94 (close)

London – FTSE 100: UP 0.2 percent at 9,710.87 (close)

AFP

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