Asian stock markets declined at Friday’s open, breaking their longest winning streak since January, as a bout of uncertainty over the timing of Federal Reserve interest-rate cuts appeared to curb investors’ risk appetite.
This cautious mood, following a mixed session on Wall Street where tech gains masked broader weakness, is pointing to a lower start for Indian benchmarks like the Sensex.
A pause in the rally: Fed uncertainty and tech’s heavy lifting
Stocks in Japan and Australia fell, while South Korean equities managed to inch higher. This follows a session in the US where the S&P 500 did manage to eke out a new record high on Thursday—its 10th in just 19 days—but the advance was precarious.
The gains were almost entirely driven by a handful of tech stocks, a dynamic that papered over a broader weakness, as most of the stocks within the benchmark index actually dropped.
The S&P 500 has surged an impressive 28% from its April lows, largely on the back of growing optimism that President Donald Trump’s tariff war won’t hurt the US economy and corporate earnings as much as initially feared.
However, the very strength of the US economy is now creating a new headache for investors.
The latest strong jobs data, which showed that jobless claims fell for a sixth straight week, has weakened expectations for imminent interest rate cuts by the Federal Reserve ahead of its crucial meeting next week.
Following the data, traders slightly pared back their bets on Fed easing, now projecting less than two full rate reductions for this year.
Despite these monetary policy concerns, technology stocks continued to be a bright spot on Thursday, driven by robust earnings from Alphabet Inc. that kept alive the expectation that the boom in artificial intelligence will continue to benefit US tech giants. Nvidia Corp also hit a fresh high.
US stock futures did open slightly higher early on Friday after Intel Corp. gave an upbeat sales forecast, but the broader sentiment remains cautious.
In fact, trading desks at major firms like Goldman Sachs Group Inc. and Citadel Securities are reportedly advising clients to buy cheap hedges against potential losses in US stocks, signaling that a slew of risks are still looming over the market’s record advance.
In other US policy news, President Trump, after touring the central bank’s headquarters, stated that firing Fed Chair Jerome Powell was not “necessary,” a comment that may help to reduce some of the political uncertainty that has previously rattled markets.
Indian markets poised for a weaker start
Indian stock market indices, the Sensex and Nifty 50, are expected to extend their losses on Friday and open lower, tracking the mixed and cautious cues from global markets.
The trends on Gift Nifty also indicated a negative start for the Indian benchmark index, with Gift Nifty trading around the 24,993 level, a discount of nearly 102 points from Nifty futures’ previous close.
This follows a session on Thursday where the domestic equity market ended lower, with the benchmark Nifty 50 closing below the 25,100 level. The Sensex had dropped 542.47 points, or 0.66%, to close at 82,184.17, while the Nifty 50 settled 157.80 points, or 0.63%, lower at 25,062.10.
Regional data and geopolitical watch
In Japan, fresh data showed that the cost of living in Tokyo cooled for a second consecutive month, partly due to some temporary factors, even as food inflation in the country remained hot.
Elsewhere, Thai assets will be in focus after the country’s F-16 fighter jets reportedly struck military sites in neighboring Cambodia as a dispute between the two nations extended.
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