Asian markets fall as dollar rises before US employment data
Asian stocks experienced a downward trend, and the dollar maintained its strength on Friday in anticipation of an important jobs report. Meanwhile, investors prepared for a Supreme Court decision regarding the legality of President Donald Trump’s extensive global tariff, which had previously unsettled markets last year. Geopolitical tensions around the world have led to a rise in oil prices and defense stocks. These developments will continue to occupy traders’ thoughts, particularly in light of the recent events in Venezuela, where US forces captured President Nicolas Maduro during a dramatic military operation in Caracas on Saturday. On Friday, significant attention will be directed towards the potential ruling by the US Supreme Court regarding tariffs. Eliminating the tariffs may affect government revenue, potentially driving Treasury yields upward and triggering fresh waves of volatility throughout the markets. Kyle Rodda remarked that the Supreme Court ruling is the “real wildcard” for markets on Friday, emphasizing that if the courts reject US tariffs, it would significantly enhance market sentiment. “A constraint may be that even if the tariffs are ruled unlawful, the Trump administration is unlikely to roll over and will look to other ways to maintain the levies.”
Currently, traders are hesitant to make any bets in anticipation of significant market events. In early trading, MSCI’s broadest index of Asia-Pacific shares outside Japan experienced a decline of 0.3 per cent, falling just short of the record high achieved earlier in the week. Japan’s Nikkei rose by 0.8 per cent, supported by robust earnings and an optimistic forecast from Fast Retailing, the company behind the Uniqlo clothing brand. European stock futures increased by 0.4 percent. The S&P 500 concluded the day unchanged, while an aerospace and defense index reached an unprecedented peak, accompanied by European defense shares also achieving a new high.
US data on Thursday indicated that demand for labor continued to be sluggish, as businesses sought to maximize output from their current workforce. This development has heightened attention on the employment report set to be released on Friday, which is anticipated to reveal that the labor market is entrenched in what economists and policymakers have described as a “no hire, no fire” mode. According to a survey, nonfarm payrolls likely rose by 60,000 jobs last month, following a rebound of 64,000 in November. The economy experienced a loss of 105,000 jobs in October, marking the largest decline in nearly five years, primarily affecting federal government employees who opted for deferred buyouts. There are expectations for at least two rate cuts from the Federal Reserve this year; however, a divided central bank signaled in December that there would be only one cut in 2026. The Fed is anticipated to maintain steady rates during its meeting this month. “We’d need a big downside surprise from the jobs data to really get the markets moving,” said Rodda. “That’s because a solid print would reassure investors that the US labour market remains in a solid position and a slight miss will just raise the odds of more rate cuts.” The yield on benchmark US 10-year notes eased a bit.bit to 4.169 percent in early trading after gaining 4.5 basis points in the previous session.
The dollar index, which measures the US currency against six other units, inched higher, hovering around a one-month high against major currencies. On Thursday, Treasury Secretary Scott Bessent stated his expectation that Trump would soon decide on a successor to Jerome Powell as the Fed Chair. Powell’s term concludes in May, as markets anticipate Trump will select a candidate with a dovish stance. Oil prices continued to rise on Friday, hovering close to a two-week high as investors grappled with developments in Venezuela and expressed concerns about supplies from Russia, Iraq, and Iran. Foreign embassies in Venezuela are starting to organize visits for next week that will involve representatives from US and European oil companies, according to sources. This development follows Washington’s announcement of a $2 billion oil deal and the provision of US goods to the South American nation. Brent futures increased by 0.6 percent, reaching $62.36 per barrel, while US West Texas Intermediate crude saw a rise of 0.5 percent to $58.04.
