By Stella Qiu
SYDNEY (Reuters) – Asian shares slipped on Friday on political tussles in South Korea, while dollar bulls waited intently to see whether U.S. wages would challenge or reinforce expectations of a rate cut this month.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.3% in part due to a 1.7% drop in South Korea’s index. The Korean won fell 0.8% to 1,425.42 per dollar, falling from a low of 1,443.4 hit on Tuesday after President Yoon Suk Yeol declared a state of emergency in the country.
South Korea’s main opposition party, the Democratic Party, said on Friday that lawmakers were on alert after receiving multiple reports of another state of emergency being declared, Yonhap news agency reported on Friday.
Elsewhere, China’s blue chips rose 0.2% and Hong Kong’s 0.4%.
fell 0.6% but rose 2.5% on the week. Data showed that local wages in Japan rose at the fastest pace in 32 years in October, although markets still favor the Bank of Japan not raising rates this month.
All eyes are on the US non-farm payrolls report due later in the day.
Forecasts focused on a gain of 200,000 jobs in November, coming back from a slight increase of 12,000 in October when the result was affected by hurricanes and strikes. The unemployment rate is likely to have risen to 4.2%, from 4.1%.
With markets priced in on the outcome of Goldilocks, there is plenty of risk as a really strong report could threaten the prospect of a rate cut, while surprisingly low numbers would heighten concerns about the economy.
Futures imply a 70% chance the Federal Reserve will cut rates on Dec. 18, suggesting the market is sensitive to the hot jobs report, especially as futures have climbed to price in an additional quarter-point cut for 2025 over the past week.
“An outcome below 100k with a U/E rate of 4.2% and certainly 4.3% could have capital under pressure, even if this almost ensures a 25bp rate cut,” said Chris Weston, head of research at Pepperstone. .
“Some may see the risk that an NFP print above 250k with the U/E rate at or below 4.1% could de-risk the markets as it raises the possibility of the Fed backing off on easing on December 18.”
Overnight, Wall Street retreated from record highs as investors adjusted their positions ahead of the earnings report. The tech-heavy Nasdaq nevertheless gained 2.5% so far this week, adding $1 trillion to its market cap.
The mighty US dollar fell 0.6% against its peers overnight and was near a three-week low of 105.84 on Friday. Bulls are wary of a sharp pullback given that the market was extremely long on the greenback.
The euro gained 0.7% overnight and was last unchanged at $1.0580, after French Prime Minister Michel Barnier resigned in an expected development of the country’s political saga.
THE TURNOVER OF BITCOIN
which hit the $100,000 mark for the first time as investors bet on a friendly regulatory change in the US, encountered profit-taking. It fell as low as $92,092 before settling at $98,265 on Friday, up 1% on the day.
“This spike in volatility over the past 24 hours has the hallmarks of a classic blowing cannon,” said Tony Sycamore, an analyst at IG.
“While we do not see this as the end of Bitcoin’s bull run, it signals that we are entering a consolidation phase in the days/weeks ahead.”
Trump said late Thursday that he is naming former PayPal (NASDAQ: ) COO David Sacks as his White House artificial intelligence and crypto czar.
In the bond market, Treasuries were flat on Friday. The two-year yield held steady at 4.15%, after rising 2 basis points overnight, while benchmark 10-year Treasury yields were flat at 4.178% and little changed on the week.
Oil prices extended their decline on Friday despite OPEC+’s decision to delay a planned April production increase. US West Texas Intermediate (WTI) slipped 0.2% to $68.18 a barrel, after falling 0.4% overnight. (OR)
Gold remained in a tight range, falling 0.4% to $2,621.89 an ounce. The decline is by 1.2% in the week.
