Asian stocks fell on Friday, following a U.S. market closure for the National Day of Mourning for former President Jimmy Carter. U.S. futures were down, and oil prices saw an increase, reports AP.
Regional markets broadly declined, with analysts attributing the drop to growing concerns over the Federal Reserve's ability to cut interest rates further, given recent data indicating unexpected strength in the U.S. economy.
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Minutes from the Fed's December meeting revealed that officials expected to slow down the pace of rate cuts this year due to persistent inflation and potential tariff hikes under President-elect Donald Trump, alongside other anticipated policy changes.
The Fed's economists noted that the U.S. economy's future was uncertain, partly due to potential changes in trade, immigration, fiscal, and regulatory policies under the incoming Trump administration.
Investors were also awaiting a U.S. non-farm jobs report later in the day.
Markets seemed worried about the risk that the Fed may adopt a more restrictive policy that could hinder the "risk-on" market sentiment, according to Tan Jing Yi of Mizuho Bank.
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Investors also remained cautious ahead of Trump's inauguration, particularly regarding the possibility of higher tariffs against China and other nations. Although increased tariffs on Chinese goods were expected, it remained unclear which other economies would be targeted or whether universal tariffs would be imposed, according to ANZ Research.
In Tokyo, the Nikkei 225 dropped 0.9% to 39,236.86, while South Korea's Kospi was unchanged at 2,521.96. Chinese markets saw further losses, with the Hang Seng down 0.5% to 19,142.98 and the Shanghai Composite down 0.5% to 3,196.01. The S&P/ASX 200 in Australia fell 0.5% to 8,292.10.
The SET in Bangkok remained nearly flat, and the Sensex in India fell by 0.4%. Taiwan's Taiex saw a slight gain, increasing by 0.2%.
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In the U.S., the bond market was open until 2 p.m. Eastern time Thursday. Yields remained relatively steady after a strong recent rise that had unsettled the stock market. The yield on the 10-year Treasury was 4.69%, after briefly surpassing 4.70%, its highest since April.
Higher yields can negatively impact stocks by making borrowing more expensive and attracting investors away from stocks towards bonds. The rise in yields has been driven by better-than-expected U.S. economic reports and concerns about inflationary pressures from potential policy changes under Trump.
In European trading on Thursday, London's FTSE 100 rose by 0.8% to 8,319.69, aided by a weaker British pound, which boosted U.K. exporters' profits. Germany's DAX lost 0.1% to 20,317.10, while France's CAC 40 gained 0.5% to 7,490.28.
In early Friday trading, U.S. benchmark crude oil increased by 38 cents to $74.29 per barrel, and Brent crude rose by 39 cents to $77.31 per barrel.
The U.S. dollar strengthened to 158.40 yen from 158.14 yen, while the euro slipped to $1.0298 from $1.0301.