Thu, Oct 6, 2022 8:51 PM
By JOE McDONALD, AP Business Writers
BEIJING (AP) — Asian shares followed Wall Street lower Friday ahead of U.S. jobs data investors hope will persuade the Federal Reserve to ease off plans for more interest rate hikes.
Tokyo and Hong Kong, the region's biggest markets, retreated. Chinese markets were closed for a holiday. Oil prices were little-changed.
Wall Street's benchmark S&P 500 index fell 1% on Thursday after a private sector report said U.S. employers hired slightly more workers than forecast in September. That gives ammunition to Fed officials who say more rate hikes are needed to cool the economy and rein in inflation that is at a four-decade high.
Investors were watching for Friday's release of U.S. government data that are expected to show fewer people were hired compared with previous months. They hope that will help persuade the Fed five rate hikes this year are working and it can scale down plans for more.
“What the market seems to be crying out for is a Fed pivot,” said Robert Carnell of ING in a report. “For its part, the Fed is sticking to its ‘higher for longer’ mantra.”
The Nikkei 225 in Tokyo sank 0.6% to 27,149.75 and Hong Kong's Hang Seng tumbled 1% to 17,823.29.
The Kospi in Seoul gained 0.2% to 2,241.87 while Sydney's S&P ASX 200 shed 0.6% to 6,777.00.
New Zealand lost 0.2% while Singapore and Bangkok advanced.
The Fed and central banks around the world are focused on extinguishing inflation that is running at multi-decade highs, but investors worry their unusually large and rapid pace of rate hikes might tip the global economy into recession.
On Wall Street, the S&P 500 fell to 3,744.52. The index is up 4.4% for the week following its best two-day rally in 2 1/2 years.
The Dow Jones Industrial Average lost 1.1% to 29,926.94. The Nasdaq composite slid 0.7% to 11,073.31.
The yield on U.S. government debt, or the difference between market price and the payout at maturity, widened. That indicates traders expect more rate hikes.
The yield on the 10-year Treasury, which helps set rates for mortgages, rose to 3.81% from 3.75% late Wednesday. The yield on the two-year Treasury rose to 4.22% from 4.14% late Monday.
Strong U.S. hiring is positive for job hunters but a sign of enduring economic strength, which might make the Fed think more rate hikes are needed.
U.S. government data showed the number of applications for unemployment benefits hit a four-month high last week. That suggests the job market might be cooling.
Forecasters expect the government to report the economy added 250,000 jobs last month, well below the past year's monthly average of 487,000 but still a strong number despite inflation and two straight quarters of U.S. economic contraction.
In energy markets, benchmark U.S. crude rose 2 cents to $88.47 per barrel in electronic trading on the New York Mercantile Exchange. The contract advanced 69 cents on Thursday to $88.45. Brent crude, the price basis for trading international oils, shed 4 cents to $94.38 per barrel in London. It rose $1.05 the previous session to $94.42.
The dollar declined to 144.92 yen from Thursday's 145.07 yen. The euro gained to 98.11 cents from 97.94 cents.