Macro update
Asian equities drop sharply:
Regional markets slid, with the Nikkei 225 and MSCI Asia-Pacific both falling more than 2% as the latest US jobs report offered little clarity on the Federal Reserve’s (Fed) near-term rate path.
Global tech slump deepens:
US technology stocks sold off despite Nvidia’s upbeat outlook, leaving the Nasdaq with its widest intraday swing since early April and pulling European equity futures notably lower.
Uncertain US rate outlook:
Solid September payroll gains were offset by a rise in unemployment and downward revisions, pushing Treasury yields lower as traders lifted the probability of a December Fed cut to around 40%.
Japan rolls out stimulus:
Prime Minister Takaichi announced a ¥21.3 trillion support package, pressuring the yen and JGBs before yields eased on guidance that bond issuance will be smaller than last year.
BOJ tightening pressure mounts:
Core inflation in Japan rose to 3% in October, fuelling expectations of an imminent rate hike, while officials warned they may intervene in FX markets as the Japanese yen trades near a 10-month low.
Commodities weaken:
Oil extended its decline on hopes of progress in Russia-Ukraine peace talks, while gold eased from recent highs as safe-haven flows shifted toward the yen rather than precious metals.
Dow Jones drops towards key support
The Dow Jones Industrial Average swiftly reversed Thursday’s gap higher and is seen falling towards its key October 45,452 low.
Were it to be slid through on a daily chart closing basis, a medium-term top may be formed with the July highs and September low at 44,948-to-44,855 being in sight.
For the bulls to be back in control, a rise above Thursday’s high at 46,856 needs to be seen.