(Bloomberg) — Asian shares fell after Wall Street traders refrained from making big bets, with US equity markets set to close ahead of Friday’s jobs report.
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Stocks dropped in Tokyo and Sydney, with futures for Hong Kong also declining. US contracts slipped, after a range-bound session for the S&P 500 Wednesday. The tech-heavy Nasdaq 100 ended little changed. Nvidia Corp. dipped in post-market trading after a report said the Biden administration plans one additional round of restrictions on the export of artificial intelligence chips.
The S&P 500 reclaimed the 5,900 psychological mark after briefly falling below it. The dollar gained against most of its major currency peers. Treasuries stabilized as a solid $22 billion sale brought a degree of relief after the recent selloff, while Australia’s 10-year yield edged higher in early trading.
Key data in Asia on Thursday will be China’s inflation reading. Headline CPI likely weakened further while factory-gate prices stayed well below year-earlier levels, according to Bloomberg Economics. That’s a sign that stronger government stimulus has yet to spur a meaningful rebound in demand, BE said.
The options market is betting the S&P 500 will move roughly 1.2% in either direction after the upcoming US employment data, according to Citigroup Inc. That would be the biggest implied move on a jobs day since September.
US employers probably tempered their hiring last month to wrap up a year of moderating yet still-healthy job growth that economists expect to carry on in 2025. A survey conducted by 22V Research showed most investors are watching payrolls closer than normal. Only 26% of the respondents think Friday’s data will be “risk-on,” 40% said “risk-off,” and 34% “mixed/negligible.”
“Investors will want to see a return to Goldilocks data, consistent with a cooling labor market to help temper the recent spike in yields and help stocks stabilize,” said Tom Essaye at The Sevens Report.
The latest Federal Reserve minutes didn’t break any significant ground, showing officials adopted a new stance on rate-cutting amid elevated price risks, deciding to move more slowly in the months ahead. Meantime, Fed Governor Christopher Waller said he believes inflation will continue to cool toward the central bank’s 2% target.
US stock markets will close Jan. 9, in observance of a national day of mourning for former President Jimmy Carter. The bond market will close at 2 p.m. New York time.
The yield on 10-year Treasuries was little changed at 4.69% on Wednesday. The 20-year yield, a laggard on the US government debt curve since its re-introduction in 2020, briefly topped 5%.
The recent slide in stocks and bonds could worsen as traders fret over the prospect of higher inflation and interest rates, but the decline is unlikely to reach the extremes seen in 2022 when markets weathered their worst year since the global financial crisis, according to Morgan Stanley’s Mike Wilson.
The bank’s chief US equity strategist expects a choppy first half of 2025 and an improved second part of the year, he said during an interview with Bloomberg Television on Wednesday. The difference between now and then is that the Fed in 2022 was aggressively raising interest rates at a pace that is unlikely going to be repeated in the foreseeable future.
There’s room for stocks to fall further 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 Mueller-Glissmann wrote in a note, stressing that if yields keep going up without good economic data, it will hit equity markets. “With equities having been relatively resilient during the bond selloff, we think near-term correction risk is somewhat elevated in case of negative growth news.”
Corporate Highlights:
Albertsons Cos. raised its adjusted earnings outlook for the full year, a positive sign for the grocer seeking to pave a new path after its proposed deal with Kroger Co. fell apart.
BlackRock Inc. told employees it’s cutting roughly 1% of its workforce after it committed more than $25 billion for acquisitions last year to expand its reach in private-market assets and data.
Ally Financial Inc. will cut jobs, end mortgage originations and consider strategic alternatives for its credit-card business as borrowers have struggled to pay down costly debt.
Constellation Energy Corp. is nearing an acquisition of Calpine Corp., people familiar with the matter said, in what would be one of the biggest ever deals in the power generation sector.
Hershey Co. is asking the US’s top derivatives regulator for permission to buy a huge amount of cocoa through the New York exchange after global shortages sent prices to a record, according to people familiar with the matter.
New York City is trying to close a loophole that Uber Technologies Inc. and Lyft Inc. have used to deny drivers millions of dollars in pay with a raft of new measures that would effectively raise their rates by roughly 6.1%.
Advanced Micro Devices Inc. was downgraded to reduce from buy at HSBC, which cited difficulty in competing with Nvidia Corp.
Merck & Co. was downgraded to hold from buy at Truist Securities, which cited growth concerns at the pharmaceutical company.
Palo Alto Networks Inc., a security software company, received a pair of analyst downgrades.
The US utilities sector was upgraded to overweight from market weight at RBC Capital Markets, which called the group the “top defensive sector.”
Key events this week:
China CPI, PPI, Thursday
Eurozone retail sales, Thursday
US state funeral and national day of mourning for former President Jimmy Carter is a federal holiday, Thursday
Japan household spending, leading index, Friday
US jobs report, consumer sentiment, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.2% as of 9:17 a.m. Tokyo time
Hang Seng futures fell 0.2%
Japan’s Topix fell 0.5%
Australia’s S&P/ASX 200 fell 0.6%
Euro Stoxx 50 futures fell 0.5%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0312
The Japanese yen rose 0.1% to 158.13 per dollar
The offshore yuan was little changed at 7.3547 per dollar
Cryptocurrencies
Bitcoin rose 0.5% to $94,903.45
Ether rose 0.9% to $3,328.16
Bonds
The yield on 10-year Treasuries was little changed at 4.68%
Japan’s 10-year yield advanced one basis point to 1.185%
Australia’s 10-year yield advanced three basis points to 4.53%
Commodities
This story was produced with the assistance of Bloomberg Automation.
