Stocks crumble as US jobs fail to clear Fed outlook, tech hammered

SYDNEY: Asian shares extended a global rout on Friday as the much-anticipated U.S. jobs data failed to provide clarity on the near-term path for interest rates, with investors returning to dumping risk assets even after Nvidia’s earnings dazzled.

Wall Street dived overnight as jitters over inflated tech stock prices returned, resulting in the Nasdaq’s widest one-day swing since April 9 when President Donald Trump’s “Liberation Day” tariffs spooked markets.

Data showed the U.S. economy added far more jobs than expected in September, but a rise in the unemployment rate and downward revisions to prior months painted an ambiguous picture for the Federal Reserve as it considers whether or not to cut interest rates next month.

Treasury yields fell as futures moved to imply a 40% probability of a U.S. rate cut in December, up from 30% a day earlier, but with the next payrolls numbers available only after the Fed meeting investors remained unconvinced of an easing next month.

On Friday, MSCI’s broadest index of Asia-Pacific shares outside Japan tumbled 1.8% to bring its weekly loss to 3%, the biggest since early April. Japan’s Nikkei fell 1.8% and was down 2.8% for the week.

Shares in Taiwan dropped 2.7% while South Korea’s market plunged over 3%.

Chinese shares also took a beating, with the blue-chips down 1.1% and Hong Kong’s Hang Seng index off 1.7%.

“The markets had plenty to be positive about and initially Nvidia’s banging quarterly results meant Wall Street burst out of the gates.

“However, the momentum simply was not there to carry the rally through, with the passing of two critical risk events – both with positive outcomes, no less – not enough to kill the bearishness gripping the markets currently.”

Still cautious fed

Fed officials overnight struck a cautious tone on inflation, as some voiced emerging concerns about financial market stability, including the potential for a sharp drop in asset prices, as they debate when and even whether to cut interest rates further.

Cleveland Fed President Beth Hammack warned that cutting rates further right now carries a wide range of risks for the economy. Fed Governor Lisa Cook sees a risk of outsized asset price declines.

In the currency markets, the dollar jumped on the risk-sensitive commodity currencies, hitting a three-month high on the Aussie and a fresh seven-month top on the kiwi , although the two Antipodeans steadied a little on Friday.

The yen briefly popped higher after Japanese Finance Minister Satsuki Katayama said intervention was a possibility in dealing with excessively volatile and speculative moves, in an escalation of jawboning from Tokyo to stem a sliding currency.

It was steady at 157.40 per dollar , after slumping to a new 10-month trough of 157.9 overnight, weighed down by prospects of a huge economic stimulus package from Japan’s new government, worth over 20 trillion yen, to be unveiled later on Friday.

Bank of Japan Governor Kazuo Ueda said a weak yen could affect underlying inflation.

Earlier in the day, data showed Japan’s core consumer prices rose 3% in October, keeping alive expectations of a near-term interest rate hike.

Treasuries steadied after gaining overnight. Two-year Treasury yields were flat at 3.554%, having fallen 4 basis points overnight, while the 10-year yield was little changed at 4.098%, after easing 3 bps in U.S. trading hours.

Oil prices extended the overnight slide on Friday as the U.S. government pushed for Ukraine’s acceptance of a peace agreement with Russia.

US West Texas Intermediate crude dropped 1% to $58.38, and was down 2.8% this week.

Spot gold prices were off 0.2% to $4,069 per ounce, having been little moved overnight.