SYDNEY: Asian shares were buoyed by a late bounce in U.S. tech on Friday as results from Meta and Amazon beat expectations, while investors are bracing for U.S. jobs figures, which could hasten bets for rate cuts if they come in below forecast.
Both quarterly results from Meta Platforms and Amazon.com impressed investors, with their shares surging 15% and 7% in after-hour trading, respectively, adding a combined $280 billion in stock market value on Thursday. Apple , however, fell 3% after the close on disappointing China sales.
Nasdaq futures extended gains to be up 1%, while S&P 500 futures rose 0.6%.
In Asia, Japan’s Nikkei added 1%, bringing the weekly gain to 1.7%, while MSCI’s broadest index of Asia-Pacific shares outside Japan also gained 1.1% and was up 0.6% on the week.
Hong Kong’s Hang Seng index jumped 1.5% while China’s bluechips eked out a modest gain of 0.1%.
All this will help wash over the flurry of worry around U.S. commercial real estate and regional banks - at least for now - although that part of the market remains under pressure. The KBW Regional Banking index fell 2%, following its 6% slide the day before.
Concerns about the health of regional lenders resurfaced after New York Community Bancorp reported increased stress in its commercial real estate portfolio.
Asia ponders Fed fallout, bonds still bullish on rate cuts
“It does provide another bit of a headwind for sentiment within the equity market. But for the Fed, I think that at this stage it’s not yet a concern that will tilt them or force them into some policy action,” said Rodrigo Catril, senior FX strategist at National Australia Bank.
For now, investors are mostly waiting for U.S. payrolls data on Friday. Economists expect the U.S. economy added 180,000 new jobs in January, while the jobless rate ticked up to 3.8% from 3.7%.
That would come after a surprise jump in jobless claims and a weak private payrolls report.
“If you look at the distributions of the survey, it actually has a significantly wide distribution, so there’s a greater degree of uncertainty in terms of the outcome,” said Catril from NAB.
“Although yesterday Fed Chair Powell didn’t think a March rate cut was likely, ultimately…the data will determine the case for when the Fed should start easing.”
A downside miss in payrolls could bring a March rate cut back into play. Markets still see a chance of a March move at about 40%, while the probability for a May move stood at 34 basis points - implying a 100% probability of 25 basis points and some chance of a 50 basis-point easing.
Reflecting the still sizeable cuts to come this year - about 145 basis points priced in - and renewed jitters over regional U.S. banks that added to safe-haven demand, U.S. Treasury yields eased to the lowest this year and held steady in Asia.
Long-term Treasury yields held at 3.8802%, after slumping 10 basis points to as far as 3.817%, while rate sensitive two-years were steady at 4.204%, having dropped 4 bps to a low of 4.134% overnight.
The slide in yields pressured the U.S. dollar, which fell 0.5% overnight against its peers and stuck to the low end of its recent range at 103.02.
The euro was buoyant at $1.0878, having lifted 0.5% overnight after data showed underlying price pressures in the euro zone were still strong. The sterling perched at $1.2752, having rallied 0.5% overnight after the Bank of England said it would trend carefully about rate cuts.
In energy markets, oil prices recouped some losses from the previous day after unsubstantiated reports of a ceasefire between Israel and Hamas helped eased supply concerns.
Brent crude futures rose 0.7% to $79.26 a barrel, after falling more than 2% the previous day, and U.S. West Texas Intermediate crude gained 0.6% to $74.3 a barrel.
Safe-haven gold was flat at $2,054.78.
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