SYDNEY : Asian shares turned lower and the dollar regained some of its footing on Friday, as disappointing earnings from U.S. tech giants undermined sentiment ahead of a key U.S. non-farm payrolls report.
That took the shine off a strong regular trading session on Thursday, when the S&P climbed 1.5 per cent and the Nasdaq surged 3.3 per cent. The uptick built on strong gains from the previous day after the Federal Reserve Chair Jerome Powell said disinflationary pressures are underway in the economy, raising hopes of an imminent pause to its monetary tightening streak.
On Thursday, the European Central bank and Bank of England hiked rates by 50 basis points each, with the BoE saying the tide was turning against inflation and the ECB indicating at least one more hike was on the horizon before re-evaluating its rate hike path. Alan Ruskin, macro strategist at Deutsche Bank, said given the current market price action ahead of the U.S. payrolls data, a softer report would be regarded as endorsing all the favourite trades of the year.
Futures markets still favour another 25-basis-point hike from the Fed at its March policy meeting, while implying that might be the end of its current tightening cycle. They have also priced in one rate cut by the end of this year.