Asian stock markets were set for a downbeat start on Friday, with futures indicating declines across key regional bourses, largely mirroring a weak session on Wall Street.
Investor caution is prevalent as global markets await crucial US jobs data, which is expected to provide significant insights into the Federal Reserve’s potential path for interest rate cuts.
Adding to the complex market picture, Indian benchmarks like the Sensex are anticipated to open on a tepid note ahead of a pivotal monetary policy announcement from the Reserve Bank of India (RBI).
The anticipated weakness in Asia follows a lackluster performance in US trading, where the S&P 500 fell by 0.5% and the tech-heavy Nasdaq 100 declined by 0.8% on Thursday.
US Treasuries also experienced a sell-off, though contracts for US stocks were mostly flat in early Asian trading on Friday. Equity-index futures for both Japanese and Australian shares pointed to a lower open.
A significant factor weighing on US benchmarks on Thursday was a dramatic 14% slump in Tesla Inc.’s shares.
This sharp decline came after President Donald Trump proposed ending Elon Musk’s government contracts and subsidies, a retaliatory move following Musk’s public criticism of the Republican’s tax-policy bill.
Musk, a former adviser to Trump, further escalated the confrontation by stating he would cease using SpaceX’s Dragon spacecraft for government missions and called for Trump’s impeachment.
This high-profile dispute overshadowed earlier, more positive news that President Trump and China’s President Xi Jinping had agreed to further trade talks.
Trump had announced that these discussions would commence shortly at a yet-to-be-determined location, aiming to resolve ongoing disputes over tariffs and rare earth minerals.
However, the subsequent “Trump-Musk war of words” quickly soured market sentiment.
“The call with Xi is arguably the factor that could have had a lasting impact on markets,” Chris Weston, head of research at Pepperstone Group, wrote in a note.
Instead, Weston observed, the call offered “nothing tangible for traders to work with and attention has quickly pushed back to the Trump-Musk war of words.”
Despite the broader cautious mood, a gauge of US-listed Chinese stocks managed to rise 0.5% on Thursday, and Hong Kong equity futures were fractionally higher in early Friday trading, bucking the general trend.
Indian markets brace for RBI policy amid tepid global cues
Indian stock market benchmark indices, the Sensex and Nifty 50, are likely to open on a subdued note this Friday.
This cautious outlook is influenced by mixed global market cues and, more significantly, the anticipation surrounding the RBI’s monetary policy decision, which Governor Sanjay Malhotra is set to announce today.
Trends on Gift Nifty also indicate a tepid start for the Indian benchmark index, with Gift Nifty trading around the 24,841 level, a discount of nearly 20 points from the Nifty futures’ previous close.
The RBI’s Monetary Policy Committee (MPC) is widely expected to deliver a 25 basis points (bps) cut in the repo rate, which would bring it down to 5.75% from the current 6%.
This potential easing comes after the domestic equity market indices ended over half a percent higher each on Thursday.
The Sensex had gained 443.79 points, or 0.55%, to close at 81,442.04, while the Nifty 50 settled 130.70 points, or 0.53%, higher at 24,750.90.
US jobs data, currency dynamics, and corporate news in focus
The 10-year US Treasury yield rose by approximately four basis points to 4.39%, partly reversing a rally from the prior session.
Meanwhile, an index tracking the US dollar fell towards its lowest level since July 2023, indicating some weakness in the greenback.
Later on Friday, all eyes will be on the US nonfarm payrolls report.
Economists surveyed by Bloomberg anticipate that payroll growth likely decelerated to 125,000 last month, following a second consecutive month of handily beating expectations in April.
The market reaction to this data will be critical.
“Anything below the 100,000 mark could reignite recession fears while a stronger-than-expected print could perversely be negative for risk assets as it would likely put upward pressure on yields,” commented Julien Lafargue, Chief Market Strategist at Barclays Private Bank.
In other US economic policy news, the Treasury Department released its semiannual foreign-exchange report on Thursday.
While declining to label any country a currency manipulator, the report specifically singled out China for “its lack of transparency.”
The last time the Treasury designated a country as a manipulator was during Trump’s first term in 2019 when China received the label, only for it to be dropped five months later as a bilateral trade deal was negotiated.
In corporate developments from Asia, Chinese ride-hailing giant Didi Global Inc. reported a return to profit in the March quarter, according to results released on Thursday.
This positive news comes as the company reportedly gears up for a potential Hong Kong market debut. Elsewhere in China, officials summoned the heads of major electric vehicle makers, including BYD Co., to Beijing earlier this week.
According to reports citing people familiar with the matter, these meetings were aimed at addressing concerns about the long-running price war in the EV sector.
Commodity markets were showing muted moves. Gold edged higher in early Friday trading after a 0.6% decline on Thursday.
West Texas Intermediate (WTI), the US oil price benchmark, was slightly lower on Friday following a gain in the prior session.
Across Asia, a series of economic data releases are scheduled for Friday beyond the Indian interest rate decision.
These include household spending figures from Japan and inflation data for Thailand and Vietnam, all of which will provide further insights into the region’s economic health.
The post Asian markets open: most futures lower; Sensex to open flat as RBI policy decision looms appeared first on Invezz