SYDNEY: Asian shares fell and Treasuries held on to gains on Friday ahead of US non-farm payrolls data, the next big test for investors looking for more signs of a rates policy shift from the Federal Reserve, while the dollar nursed heavy losses.
The cautious tone in share markets, after the recent big rally, is set to extend to Europe, with the pan-region Euro Stoxx 50 futures easing 0.2%, German DAX futures down 0.1% and FTSE futures 0.2% lower.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.7%. Nonetheless, the index was set for a weekly gain of 3.6%, hovering around its highest level since mid-September. Japan’s Nikkei fell 1.7%.
S&P 500 futures softened 0.2%, while Nasdaq futures fell 0.3%. US shares ended mixed on Thursday after a big rally the day before, buoyed by comments from Fed Chair Jerome Powell that did not sound as hawkish as some had feared.
Data overnight including falling US job openings and contracting US manufacturing activity, pointing to signs of easing cost pressure added to evidence that the Fed’s rate hikes have cooled the economy. Investors are also watching for more signs that China is easing its zero-COVID policy, and whether China would contribute more to global growth next year amid a looming global recession.
Chinese blue chips slid 0.5%, as the country grappled with a surge in COVID-19 cases. Hong Kong’s Hang Seng index reversed earlier gains to be down 0.7%.
Sources told Reuters that China is set to announce an easing of its COVID quarantine protocols in the coming days and a reduction in mass testing, a marked shift in policy after anger over the world’s toughest curbs fuelled widespread protests.
Shane Oliver, chief economist at AMP Capital, said after a strong November markets in some cases are up to around technical resistance levels, and it may take a while to get through those points.
“But I suspect given the increasing signs that inflation is peaking globally and China is easing its COVID restrictions moving away from zero COVID - they haven’t said as much but certainly it is moving away from zero COVID - that those things are probably positive,” he said.