Asian stocks slipped on Friday, following a subdued performance on Wall Street, as traders anxiously awaited the release of US jobs data that could provide clarity on the direction of interest rates. In China and Hong Kong, shares showed mixed movement, while Japanese and South Korean stocks posted losses. Australia managed to recover from early declines, and US futures remained stable after the S&P 500 rose 0.4% and the Nasdaq 100 gained 0.5% on Thursday. The yen fluctuated after appreciating for four consecutive days.
The drop in Japanese stocks was partly attributed to a stronger yen, which reached its highest level since early December following comments from Bank of Japan board member Naoki Tamura, who advocated for higher interest rates. Japanese Prime Minister Shigeru Ishiba is also scheduled to meet US President Donald Trump on Friday, which adds to the market’s volatility.
“Hawkish comments from Japanese officials regarding domestic interest rates have sparked some enthusiasm for the yen,” explained Jerry Minier, co-head of G10 FX trading at Barclays. “Meanwhile, the dollar is losing momentum for now.”
US Treasury yields held steady after minor declines across the curve on Thursday, and the dollar index remained largely unchanged.
Markets are bracing for the upcoming nonfarm payroll report, which is expected to show 175,000 new jobs added in the US economy. The report will likely shift traders’ focus away from the tariff-related market drama earlier in the week. A weak jobs report could fuel expectations for further Federal Reserve interest rate cuts, while stronger-than-expected job growth may have the opposite effect.
Thursday’s jobless claims data showed a slight uptick in initial claims, while labor productivity remained robust. In addition to the headline jobs number, Wall Street is closely monitoring a revision to previous job growth estimates, which economists expect to be significant but not as severe as initially feared.
“The market is likely to stay directionless for now,” said Amy Xie Patrick, head of income strategies at Pendal Group. “I’m focusing on holding quality assets, seeking safer investments, and maintaining flexibility,” she added.
In a separate development, Treasury Secretary Scott Bessent stated that the department is reaching out to major government bond holders to gauge their views on the federal debt limit. Bessent also reiterated his support for a strong dollar and ruled out any immediate changes to the government’s debt issuance strategy.
Amazon shares saw a decline in after-hours trading following its earnings report, which revealed projections for the current quarter falling short of analysts’ estimates. The shortfall was attributed to the company’s ongoing investment in artificial intelligence services.
In Asia, upcoming data releases include outright bond purchases by the Bank of Japan, inflation figures for Taiwan, and a rate decision by the Reserve Bank of India. Analysts anticipate the Reserve Bank of India may lower its benchmark repurchase rate by 25 basis points to 6.25%, although some believe a 50-basis-point cut is possible.
Job Revisions to Take Center Stage
The Bureau of Labor Statistics’ January employment report, typically not given much attention for its revisions, is expected to be more closely scrutinized this year. The preliminary estimate suggested a downward revision of 818,000 jobs, the largest since 2009. Economists predict that the actual adjustment will be in the range of 600,000 to 700,000 jobs, which would be a relief to markets. The standard jobs report is expected to show a gain of 175,000 jobs in January, following gains of more than 200,000 in the two previous months.
For Federal Reserve officials, the revisions and the January jobs data will likely confirm that labor demand is cooling, although it remains strong enough to support the economy.
“Unless the jobs number significantly deviates from the expected range of 170,000 to 200,000, the market is unlikely to see much volatility,” said Gaurav Mallik of Pallas Capital Advisors. “A stronger-than-expected number could eliminate the possibility of rate cuts this year, while a weaker number could raise concerns about a weakening labor market.”
Fed Chair Jerome Powell has stated that the central bank wants to see more consistent progress on inflation and will be looking for continued positive data on price pressures.
Currently, traders expect the next Fed move to be a rate cut, likely occurring in the middle of the year. Treasury yields hit their lowest levels of 2025 this week.
In commodities, gold stabilized after retreating from a record high on Thursday, marking its first decline in six sessions. Oil prices were little changed after falling the previous day, with President Trump’s renewed pledge to reduce crude oil prices overshadowing his push for tougher sanctions on Iran.
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