On Friday, Asian stocks were on track for their worst week in over a month, while oil prices were down and bonds were enjoying their best bid in weeks due to weaker-than-expected U.S. data and earnings reports. The overnight figures showed an increase in Americans filing jobless benefits claims, and the manufacturing activity in the mid-Atlantic region also saw its lowest level in nearly three years.
This data, along with other signals of a slowdown in the world’s biggest economy, caused Brent crude futures to drop 2.4% for their steepest single-day decline in five weeks. Furthermore, U.S. Treasuries rallied as investors turned to safety and bet that the U.S. hiking cycle is almost over. The data helped drag down the MSCI’s broadest index of Asia-Pacific shares outside Japan, which was 0.3% lower and down 1% for the week so far, the worst performance since mid-March. The S&P 500 also fell overnight, with some heavy selling on weak results from Tesla and AT&T.
Meanwhile, the slowdown signals have also weighed on the U.S. dollar, and traders are betting on 50 bps in U.S. rate cuts this year. The Japanese market was an outlier in the region, with the Nikkei touching an eight-month high and on track for a second consecutive weekly gain. Corporate governance in Japan has suddenly become a cause celebre, and seems to be rousing the world’s third-largest stock market out of decades of lethargy.
Elsewhere, the mood dragged on Bitcoin, which is back below $30,000, while the fall in yields has gold, which pays no income, supported at $2,002 an ounce. In the oil market, Brent is also below its 50-day moving average for the first time since oil producers unexpectedly announced extra production cuts two weeks ago, and traders are closely watching for producers’ and buyers’ response to Chilean plans to nationalise the lithium industry.