Asian stock markets fell on Friday as worries about a “hawkish” Federal Reserve grew ahead of important U.S. labour data. However, most bourses were set for weekly gains as they recovered from big losses in September.
Most regional stock markets went down between 0.3% and 1.4%, with the tech-heavy Taiwan Weighted Index having the biggest drop. Tech stocks went back down after some Federal Reserve officials said things that made the dollar and Treasury yields go up.
Wall Street indexes also didn’t set a good tone for regional bourses, and the day ended on a down note as rising yields hurt.
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Due to a week-long holiday in China, there wasn’t much trading in Asia. But most bourses in the region were expected to go up this week after having their worst month since COVID-19 broke out in March 2020.
This week, Australia’s S&P/ASX 200 index was expected to go up by almost 5%, which would be its best weekly performance in over two years. This was because the Reserve Bank raised rates by less than expected, which sent a “dovish” message to the markets.
The Nikkei 225 Index in Japan went down 0.7% and was up 4.5% this week. Better-than-expected industrial production and retail sales data showed that the Japanese economy is holding up well.
But this year, economic growth will be slowed by a number of negative factors, especially rising inflation and a weakening yen. Friday’s data showed that in August, Japanese households spent less than they did in July.
The sentiment about India got worse after the rupee hit a record low on Friday, which caused the blue-chip Nifty 50 index to go down by 0.4%.
This year, the Asian stock markets crashed because a number of major central banks started to raise interest rates. This ended the two years of easy money that the markets had been enjoying.
When it comes out later on Friday, U.S. nonfarm payrolls data is likely to play a role in the Fed’s plans to raise rates. As long as the job market stays strong, the central bank should have enough room to keep raising rates.
Related: Asian stocks go up, but futures show that the rise might not last long.Â
Traders are currently pricing in a nearly 73% chance that the Fed will raise rates by 75 basis points at its next meeting. The central bank has already given signs that U.S. interest rates will be higher than 4% by the end of the year. This means that risky assets will be under more pressure.
