Asian Stocks Dip as Traders Shift Focus to US Jobs: Markets Wrap

Posted by Admin January 8, 2025 Jobs

(Bloomberg) — Asian shares fell after a range-bound session on Wall Street, as caution grew ahead of Thursday’s closure of US equity markets and an important jobs report later in the week.

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Stocks dropped in Japan and Australia, with futures for Hong Kong also declining. US contracts slipped. Nvidia Corp. dipped in post-market trading after a report said the Biden administration plans one additional round of restrictions on the export of artificial intelligence chips.

The dollar and Treasuries were steady in early Asian trade.

Investors will likely pay close attention to China’s consumer price data due Thursday that Bloomberg Economics says will show worsening deflationary pressures in the world’s No. 2 economy. Also on their minds is Friday’s US employment report that may shed more light on the Federal Reserve’s policy outlook.

Meanwhile, US stock markets will close Jan. 9, in observance of a national day of mourning for former President Jimmy Carter. The bond market will shut at 2 p.m. New York time.

“The Chinese market and Chinese policies are coming to the stage where we are bottoming out,” Vincent Chui, head of Asia Pacific wealth management for Morgan Stanley, said on Bloomberg TV. However, given the ongoing appeal of US stocks, “China may take a bit more time to attract global investors,” he said.

On Wednesday, the S&P 500 reclaimed the 5,900 psychological mark after briefly falling below it. The dollar gained against most of its major currency peers. Treasuries stabilized as a solid $22 billion sale brought a degree of relief after the recent selloff.

The options market is betting the S&P 500 will move roughly 1.2% in either direction after the upcoming US employment data, according to Citigroup Inc. That would be the biggest implied move on a jobs day since September.

US employers probably tempered their hiring last month to wrap up a year of moderating yet still-healthy job growth that economists expect to carry on in 2025. A survey conducted by 22V Research showed most investors are watching payrolls closer than normal. Only 26% of the respondents think Friday’s data will be “risk-on,” 40% said “risk-off,” and 34% “mixed/negligible.”

“Investors will want to see a return to Goldilocks data, consistent with a cooling labor market to help temper the recent spike in yields and help stocks stabilize,” said Tom Essaye at The Sevens Report.

The latest Federal Reserve minutes didn’t break any significant ground, showing officials adopted a new stance on rate-cutting amid elevated price risks, deciding to move more slowly in the months ahead. Meantime, Fed Governor Christopher Waller said he believes inflation will continue to cool toward the central bank’s 2% target.

The recent slide in stocks and bonds could worsen as traders fret over the prospect of higher inflation and interest rates, but the decline is unlikely to reach the extremes seen in 2022 when markets weathered their worst year since the global financial crisis, according to Morgan Stanley’s Mike Wilson.

The bank’s chief US equity strategist expects a choppy first half of 2025 and an improved second part of the year, he said during an interview with Bloomberg Television on Wednesday. The difference between now and then is that the Fed in 2022 was aggressively raising interest rates at a pace that is unlikely going to be repeated in the foreseeable future.

Corporate Highlights:

Albertsons Cos. raised its adjusted earnings outlook for the full year, a positive sign for the grocer seeking to pave a new path after its proposed deal with Kroger Co. fell apart.
BlackRock Inc. told employees it’s cutting roughly 1% of its workforce after it committed more than $25 billion for acquisitions last year to expand its reach in private-market assets and data.
Ally Financial Inc. will cut jobs, end mortgage originations and consider strategic alternatives for its credit-card business as borrowers have struggled to pay down costly debt.
Constellation Energy Corp. is nearing an acquisition of Calpine Corp., people familiar with the matter said, in what would be one of the biggest ever deals in the power generation sector.
Hershey Co. is asking the US’s top derivatives regulator for permission to buy a huge amount of cocoa through the New York exchange after global shortages sent prices to a record, according to people familiar with the matter.
New York City is trying to close a loophole that Uber Technologies Inc. and Lyft Inc. have used to deny drivers millions of dollars in pay with a raft of new measures that would effectively raise their rates by roughly 6.1%.
Advanced Micro Devices Inc. was downgraded to reduce from buy at HSBC, which cited difficulty in competing with Nvidia Corp.
Merck & Co. was downgraded to hold from buy at Truist Securities, which cited growth concerns at the pharmaceutical company.
Palo Alto Networks Inc., a security software company, received a pair of analyst downgrades.
The US utilities sector was upgraded to overweight from market weight at RBC Capital Markets, which called the group the “top defensive sector.”

Key events this week:

China CPI, PPI, Thursday
Eurozone retail sales, Thursday
US state funeral and national day of mourning for former President Jimmy Carter is a federal holiday, Thursday
Japan household spending, leading index, Friday
US jobs report, consumer sentiment, Friday