Investing.com-- Most Asian stocks fell on Friday, tracking overnight declines on Wall Street as hawkish signals from Federal Reserve officials, especially ahead of key payrolls data, spurred more uncertainty over U.S. interest rate cuts.
Fears of a worsening conflict in the Middle East- as Iran threatened military action against Israel- kept risk appetite largely subdued. Regional trading volumes were also muted on account of a Chinese market holiday.
Asian stocks took a weak lead-in from Wall Street, as U.S. benchmarks fell more than 1% on Thursday after Fed officials warned that sticky inflation will delay any potential interest rate cuts this year. Anticipation of nonfarm payrolls data- which is expected to factor into the Fed’s outlook- also kept markets on edge.
U.S. stock futures were muted in Asian trade.
Japan’s Nikkei 225 leads losses as yen firms
Japan’s Nikkei 225 was by far the worst performer in Asia on Friday, sinking 2.5% to an over two-week low.
The Nikkei was hit with extended profit-taking after surging to record highs in March. The index has also struggled to make headway in April with increased uncertainty over the path of inflation and monetary policy in the country. Sticky inflation could elicit more interest rate hikes by the Bank of Japan.
Export-oriented stocks were the biggest decliners on the Nikkei, as the yen rebounded from recent losses to a two-week high. Continued threats of currency market intervention from the Japanese government were a key driver of the yen’s recovery.
Broader Japanese stocks also fell, with the TOPIX losing 1.7%.
Other Asian stocks trended lower, with technology stocks tracking overnight declines in their U.S. peers.
South Korea’s KOSPI fell more than 1%, with Samsung (LON:0593xq) Electronics (KS:005930), the biggest stock on the index, falling 1.5% even as it forecast a stellar bounce in its first quarter profit.
Hong Kong’s Hang Seng index shed 1.1%, with an element of catch-up trade also in play after a holiday on Thursday.
Australia’s ASX 200 fell 0.9%, weighed by losses in major bank and mining stocks. Data on Friday showed a bigger-than-expected decline in Australia’s trade balance in February, marked by a sustained drop in iron ore exports to China.
India’s Nifty 50, Sensex hit record highs with RBI on tap
Futures for India’s Nifty 50 index pointed to a flat open, after the index and the BSE Sensex 30 closed at record highs on Thursday.
Gains were spurred chiefly by buying into index-heavyweight bank and industrial stocks, amid some positioning ahead of the 2024 general elections. Sentiment was also aided by a recovery in small-cap stocks.
Focus was also squarely on the conclusion of a Reserve Bank of India meeting later on Friday. While the central bank is widely expected to hold its policy repo rate at 6.5%, its outlook on inflation and economic growth will be closely watched.