Asian Stocks Decline As Traders Pare Back Risk: Markets Wrap

A selloff in Asian stocks extended to a seventh day after weak US jobs data triggered a pullback in equities and fueled bets on an interest-rate cut by the Federal Reserve.

The MSCI Asia Pacific Index fell 0.3% as shares in Japan slumped more than 2%. South Korean shares fluctuated amid speculation about revising a capital gains tax. Bonds pared back gains across the curve Friday. Oil retreated as OPEC+ wrapped up a run of major output hikes. The dollar edged lower for a second day while gold was down 0.3%. 

The moves suggest Friday’s sharp retreat on Wall Street — sparked by rising US unemployment and slower job creation — is still rippling through global markets. The weak data is fueling investor concern after US stocks rallied for three straight months on speculation the US economy would withstand President Donald Trump’s tariff storm. 

“All of a sudden, questions are being raised about the continued expansion of the US economy,” wrote Kyle Rodda, a senior market analyst at Capital.com in Melbourne. Despite the markets pricing in chances of a September rate cut, “it was risk-off in the markets, showing it was a veritable case of bad news being bad news,” he said.

The S&P 500 ended Friday 1.6% lower and the tech-heavy Nasdaq 100 dropped 2%, the biggest one-day declines in months for the two benchmarks. 

The US 10-year yield dropped 16 basis points Friday while policy-sensitive two-year yields fell 28 basis points. The sharp declines reflected heightened anticipation the Fed will cut interest rates in its September meeting after holding borrowing costs steady in its last meeting.

Following the jobs data, some market-watchers are even anticipating the Fed may cut rates by 50 basis points, twice the regular amount.

“September is a lock for a rate cut — and it might even be a 50-basis point move to make up the lost time,” said Jamie Cox at Harris Financial Group.

In oil, OPEC+ agreed to another major output increase, stoking concerns about global oversupply just as the US-led trade war may be exacting a toll on economic growth and energy consumption.

Brent edged lower toward $69 a barrel, while West Texas Intermediate was near $67, after OPEC+ endorsed an additional 547,000 barrels-a-day of output from September.

Separately, Trump said he will announce a new Fed governor and a new jobs data statistician in the coming days, two appointments that could shape his economic agenda.

The Fed announced Friday that Adriana Kugler will step down from her position as a governor, giving Trump an opportunity to install a policymaker who aligns with his demands for lower interest rates.

Also on Friday, Trump fired chief labor statistician Erika McEntarfer hours after labor market data showed weak jobs growth based in part on steep downward revisions for May and June.

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.1% as of 9:40 a.m. Tokyo time

• Hang Seng futures fell 0.7%

• Nikkei 225 futures (OSE) fell 2.3%

• Japan’s Topix fell 1.9%

• Australia’s S&P/ASX 200 was little changed

• Euro Stoxx 50 futures rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro fell 0.2% to $1.1567

• The Japanese yen fell 0.1% to 147.55 per dollar

• The offshore yuan was little changed at 7.1910 per dollar

• The Australian dollar was little changed at $0.6468

Cryptocurrencies

• Bitcoin was little changed at $114,445.7

• Ether rose 0.7% to $3,519.08

Bonds

• The yield on 10-year Treasuries was little changed at 4.22%

• Japan’s 10-year yield declined seven basis points to 1.485%

Commodities

• West Texas Intermediate crude fell 0.5% to $67.01 a barrel

• Spot gold fell 0.3% to $3,354.06 an ounce

This story was produced with the assistance of Bloomberg Automation.