(Times of Update) — U.S. stocks and the dollar index fell ahead of jobs data Friday, which will help determine the size of the Federal Reserve’s rate cut this month.
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In Asia, Japanese stock futures rose as the yen steadied after a rally this week, while Australian stock futures were little changed. U.S. stock futures slipped after the S&P 500 fell on Thursday. Hong Kong is set to close its stock market Friday morning due to Super Typhoon Yagi.
Treasury yields edged lower Thursday, with the 10-year yield falling three basis points, adding to downward pressure on the greenback. The Times of Update Dollar Index, which tracks the U.S. currency against a basket of currencies, edged lower Friday morning after falling 0.2% Thursday. Australian and New Zealand bonds were little changed.
The moderate moves come ahead of the nonfarm payrolls report, which will shed new light on the health of the U.S. labor market. Traders are still pricing in more than 100 basis points of easing this year, implying a potentially very large reduction. Given Jerome Powell’s recent emphasis on the labor market, many Wall Street analysts believe the jobs data will determine whether the central bank cuts rates by 25 or 50 basis points this month.
“The danger of ‘bad news’ is that even if the Fed is prepared to respond aggressively, it may be too late to avoid real economic weakness,” said Steve Sosnick of Interactive Brokers. “But there is concern that if the news is ‘too good,’ the Fed will be reluctant to cut rates as quickly as the market expects.”
Elsewhere in Asia, China could face new export controls on critical technologies from the Biden administration. Washington has restricted China’s ability to access cutting-edge technologies needed for artificial intelligence, out of concern that advanced chips and components could give Beijing a military advantage.
Markets will also be closely watching China’s bond market, as some government debt recently purchased by the central bank is now being sold in the secondary market, traders said – a possible sign that authorities are once again stepping in to curb rising debt.
Meanwhile, Thailand’s parliament passed a 3.75 trillion baht ($111 billion) budget allowing newly appointed Prime Minister Paetongtarn Shinawatra to boost state spending to speed the country’s economic recovery.
The S&P 500 index fell 0.3%. Nvidia Corp. climbed, with analysts at Bank of America Corp. saying the recent slide created a “reinforced” buying opportunity. Tesla Inc. gained on plans to launch its driver-assist system in China and Europe. Broadcom Inc. fell late in the day on mixed forecasts.
Ahead of the U.S. jobs report, economic data was mixed. Services expanded at a moderate pace, businesses added the fewest jobs since early 2021, while jobless claims fell short of estimates.
The jobs report is expected to show that wages rose by about 165,000, according to the median estimate of a…
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