Asian stocks fell on Friday as sharp swings in bond yields and currencies kept investors cautious ahead of US jobs data, while a growing US military presence in the Gulf kept oil prices elevated.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.5% and was on track for a 1.7% weekly decline. Japan’s Nikkei dropped 0.7% but remained on course for a 3.1% weekly gain.
Bond markets remained at the centre of the volatility after the 10-year US Treasury yield briefly climbed to 5.34%, its highest level since 2002, before easing to 5.2512% in Asian trading.
The yield had risen sharply over the past quarter, recording its biggest quarterly increase in 32 years, although investors returned to longer-dated Treasuries after the recent selloff.
The 30-year Treasury yield also eased after reaching a 24-year high, while the two-year yield was at 4.8039% after falling 10 basis points overnight.
Markets were now focused on US non-farm payrolls due later on Friday. Economists expect the economy to have added 90,000 jobs in September, with the unemployment rate forecast to remain at 4.1%.
Wage data will also be closely watched after recent manufacturing data pointed to renewed price pressures.
“With the Fed now myopically focused on inflation and price pressures, a hot wages print could prove particularly influential for US rates, Treasuries and the USD,” said Chris Weston, head of research at Pepperstone.
Markets currently price a 25% probability of another Federal Reserve rate hike in October, sharply lower than 69% a week earlier. A December increase, however, remains fully priced in.
The dollar index rose 0.6% overnight to 102.09, its highest level since April 2025, and was heading for a third consecutive weekly gain.
The euro fell to US$1.1235, its weakest level since May 2025, after concerns over France’s fiscal position pushed the spread between French and German government bond yields above 140 basis points, its widest since 2012.
The Swiss franc strengthened as investors sought safer assets, while the yen traded at 158.13 per US dollar after data showed Tokyo’s underlying inflation accelerated to 2.7% in September.
Wall Street futures were slightly higher, with Nasdaq futures up 0.3% and S&P 500 futures adding 0.1% as lower Treasury yields provided some relief.
Oil prices remained firm after surging overnight, with WTI steady at US$92.84 a barrel. Brent crude remained above US$102.
Reports that the US was sending additional troops and aircraft carriers to the Middle East, combined with China’s suspension of oil product exports, raised concerns that global fuel shortages could worsen.
Mainland Chinese markets remained closed for a public holiday through Wednesday next week.
Reuters
