Asia stocks choppy, on track for best month in three years

SINGAPORE: Stocks were volatile in early Asian trading on Friday after US President Donald Trump ​endorsed a bipartisan deal to avert a fresh government shutdown and said he has decided who he will nominate to lead the ‌Federal Reserve.

MSCI’s broadest index of Asia-Pacific shares outside Japan fluctuated between gains and losses and was recently down 0.2%, extending the previous day’s declines as it headed for its best monthly performance in more than three years.

S&P 500 e-mini futures slid 0.4% and Nasdaq e-mini futures were off 0.5%, while precious metals were choppy after a flash crash.

“Progress toward averting a shutdown would reinforce U.S. yields and the dollar, while heightened shutdown risk would shift markets to headline-driven moves amid possible data ‌delays,” said Shoki Omori, chief desk strategist for rates and FX at Mizuho in Tokyo.

On Thursday, Wall Street stocks fell ​after lacklustre earnings from Microsoft raised fears about whether its bets on artificial intelligence would pay off. The S&P 500 closed down 0.1% and the Nasdaq Composite tumbled 0.7%.

“There was plenty of drama in the markets,” analysts from Westpac wrote in a research report. “Sentiment shifted during U.S. trading hours when concerns ‍about equity valuations in the technology sector resurfaced.”

With just under a third of S&P 500 companies having reported, 76% of companies have beaten earnings estimates. But earnings season has thus far been a mixed bag for the major U.S. tech firms that dominate the index.

Microsoft’s shares dropped 10% on Thursday, shredding more than $350 billion in market value after its cloud business failed to ⁠impress, while Meta gained 10% as its AI investments bolstered ad targeting, aiding a rosy first-quarter forecast.

Meanwhile, Apple on Thursday forecast a surge of ‍up to 16% in revenue for the March quarter, well ahead of Wall Street’s expectations, powered by strong demand for its iPhones and a sharp rebound in China.

In Japan, ‌the Nikkei ‌225 was flat after data on Friday showed that core consumer prices in Tokyo rose 2.0% in January from a year earlier, slowing from the previous month but matching the Bank of Japan’s target, easing pressure on the central bank.

The US dollar index , which measures the greenback’s strength against a basket of six currencies, was last up 0.3% at 96.441 after Trump said he would unveil his pick to replace Federal Reserve Chair Jerome Powell on Friday.

On prediction market site Polymarket, the implied ⁠probability of contracts betting that Trump ⁠will nominate former Fed Governor Kevin ​Warsh to lead the central bank surged to 88%.

The yield on the U.S. 10-year Treasury bond was last up 3.8 basis points at 4.263%. Fed funds futures are pricing an implied 86.6% probability that the US central bank will hold steady on rates at its next two-day meeting on March 18, compared with a 87.5% chance a day earlier, according to ‍the CME Group’s FedWatch tool. A faltering rebound for precious metals fell short after a choppy session on Thursday.

Gold was last down 0.7% at $5,357.9404, while silver slipped 0.2% to $115.89.

“The liquidation of what had become some grossly extended positioning … is not overly surprising, particularly in the precious metals space,” said Chris Weston, head of research at Pepperstone Group in Melbourne.

WTI crude ​was last down 0.7% at $64.95 as oil markets weighed geopolitical risks, after Trump on Thursday signed ‍an executive order declaring a national emergency and establishing a process to impose tariffs on goods from countries that sell or provide oil to Cuba.

Also Thursday, Trump said he was planning to ​talk to Iran amid rising tensions. Bitcoin was last down 2.0% at $82,684.51, while ether = was last down 1.7% at $2,768.01.