SITREP: Asian Stocks Decline, US Dollar Strengthens

Via Syndicated Feed

Cover Image Attribute: Reto Keller from Pixabay

Asian stocks decline, and the dollar strengthens prior to the release of U.S. employment data.

The worldwide stock market rally encountered obstacles in Asia on Friday, as unsatisfactory financial results from prominent tech companies in the U.S. impacted morale. At the same time, the dollar value improved somewhat before a crucial report on U.S. non-farm payroll was released.

European markets are expected to remain cautious, with Euro Stoxx 50 futures falling 0.1%, German DAX futures falling 0.2%, and FTSE futures staying unchanged.

During the night, the market held a pessimistic outlook on the interest rate guidance from the European Central Bank and the Bank of England, hoping the massive worldwide tightening cycle would end, causing local bonds to rise and rise and currencies to currencies to decrease.

Asian Markets

On Friday, the MSCI Asia-Pacific shares index outside of Japan decreased by 0.6% due to a 1.3% drop in Chinese blue-chip stocks and a 1.4% decrease in the Hong Kong Hang Seng index. Investors are looking for more concrete evidence of an economic recovery in China after all COVID restrictions were lifted in December, leading to an influx of foreign investment. Meanwhile, other markets in the region saw slight growth. The Nikkei in Japan increased by 0.3%, Australia's resource-heavy shares, S&P/ASX 200 index rose by 0.6%, and South Korea's KOSPI went up by 0.5%.

Tech Stocks

The underwhelming financial results from Google, Apple, and Amazon dampened market sentiment, causing the S&P 500 futures to drop 0.5% and the Nasdaq futures to decrease by 1.5% on Friday. Tech stocks experienced a significant drop in after-hours trading on Thursday, with Apple's shares falling by 3.2%, Amazon's shares declining by 5%, and Alphabet (Google's parent company) down by 4.6%. Apple forecasted another decrease in revenue at the beginning of the year. In addition, Amazon warned that its operating profit could reach zero in the current quarter, and Alphabet (Google's parent company) failed to meet expectations in its fourth-quarter profit and revenue.

Fed's stand

This negated the positive impact of a successful regular trading session on Thursday when the S&P increased by 1.5%, and the Nasdaq rose by 3.3%. The improvement built upon the substantial gains from the previous day, following Federal Reserve Chair Jerome Powell's statement that disinflationary forces are present in the economy, which raised the expectations that the monetary tightening period will soon come to a halt. Investors are also observing the aftermath of this week's sharp decrease in shares of India's Adani group, which continued to plummet on Friday, causing market losses of $115 billion following a report by a U.S. short-seller.

European Banks

On Thursday, the European Central Bank (ECB) and Bank of England (BoE) raised their interest rates by 50 basis points each. The BoE stated that the trend was shifting against inflation, while the ECB signaled that there would be at least one more interest rate hike before reassessing its rate hike plan. In response, European yields significantly decreased, with the 10-year German bunds declining by 22.6 basis points to 2.065%, the most significant drop since 2011, and Italian bonds falling by 40 basis points to 3.887%, the biggest drop since 2020.

Job Market

Experts anticipate that 185,000 jobs were added in the previous month, the smallest increase since January 2021. In addition, unemployment rose to 3.6%, and hourly wage inflation remained unchanged at 0.3% monthly, indicating that the robust job market may have begun to weaken. Despite this, futures markets continue to predict another 25-basis-point increase from the Federal Reserve at its March policy meeting, indicating that this might be the end of its current monetary tightening period. They have also factored in one interest rate cut by the end of this year, which Powell has rejected.

Currency Market

The euro continued to decline against the US dollar, reaching $1.0889 and moving away from its ten-month high of $1.1033 on Thursday. The British pound dropped to $1.2213 on Friday, its lowest in more than two weeks, following a 1.2% decline in the previous session. This resulted in the US dollar regaining some of its losses after the Federal Reserve announcement, with the dollar index now at 101.85, far from its nine-month low of 100.80.

Treasury Bonds

The interest rates on US Treasury bonds remained relatively stable. The yield on the 10-year Treasury note decreased slightly by two basis points to 3.3726%, while the two-year Treasury bond yield was unchanged at 4.0918%. 

Oil 

In the oil market, Brent oil prices went down 0.2% to $82.01 per barrel, and WTI crude also decreased 0.2% to $75.70.

Gold

The price of gold increased by 0.2%. The current gold price is $1915.66 per ounce.

This story has not been edited by IndraStra Global Staff and is auto-generated from a syndicated feed.

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