HONG KONG: Asian markets fluctuated on Friday as traders tried to track a Wall Street rally ahead of crucial US jobs data, while Tokyo took a hit from an extended yen rally on bets Japan will drop its ultra-loose monetary policy.
A volatile week looked set to end on a positive note as a series of figures indicated the US labor market and economy were slowing, fueling speculation the US Federal Reserve (Fed) will be able to cut interest rates in early 2024.
Hopes for a lower rate environment were behind a stock rally last month, though December has been a little tougher owing to worries the buying may have been overdone.
There is also some reticence among traders owing to concerns that the weaker economic readings suggest the world’s No. 1 economy could tip into recession.
Friday’s figures come as inflation continues to come down and US job openings and private payrolls slowed in November.
“The jobs report is likely to provide additional indications of the labor market softening, a welcome sign for employers,” said Jose Torres at Interactive Brokers.
“Its impact on markets, however, will depend on whether investors view the data as a stepping stone to a March rate cut and soft landing, or an adverse effect on consumer spending and a sharper economic slowdown.”
Wall Street’s three main indexes ended on a strong note, led by the Nasdaq as tech giants outperformed.
But Asia was unable to maintain the momentum, with Hong Kong and Shanghai fluctuating, while Sydney, Seoul, Singapore and Taipei rose and Wellington fell.
Tokyo was the key loser, dropping more than 1 percent as the yen continued its rampage against the dollar, which hurts exporters.
The currency surged almost 4 percent at one point on Thursday after Bank of Japan (BoJ) boss Kazuo Ueda said handling monetary policy “will become even more challenging from the year-end and heading into next year.”
The remarks suggested the bank was on the brink of shifting away from its long-running ultra-loose monetary policy put in place to kick-start growth.
The comments were made a day after deputy governor Ryozo Himino played down the adverse consequences of such a move on the economy.
The yen strengthened to 141.71 per dollar at one point on Thursday, compared with more than 147 earlier in the day.
The yen has been one of the year’s worst performers owing to the BoJ’s refusal to budge on policy even though most other central bank have hiked rates to battle inflation.
But it has regained some of its mojo as the Fed turns more dovish and Japanese policymakers more hawkish.
