(Nov 7) : Stocks in Asia were poised to decline Friday after a volatile US session, weighed down by concerns over stretched artificial intelligence valuations and signs of a cooling labor market.
Equity-index futures for Japan, Hong Kong and Australia all declined. In the US, shares fell for the second time in three days, sending high-flying AI stocks from Nvidia Corp. to Palantir Technologies Inc. lower. Treasury 10-year yields tumbled the most in a month after data showed the steepest October job cuts in more than two decades. A closely watched volatility gauge briefly topped 20.
Investors who have fueled the rally on expectations of Federal Reserve rate cuts and AI-driven growth are now questioning whether heavy capital spending will deliver. Technical signals are flagging reasons for caution while worries of a narrowing cohort of stocks driving gains have become louder.
“The market seems to have continued angst about the valuations of AI stocks,” said Jonestrading’s Dave Lutz, adding that semiconductor stocks were “under decent pressure.”
The selloff came as earnings season winds down and as investors become reliant on private data amid a dearth of economic figures due to the ongoing US government shutdown.
The latest private data release, from Challenger, Gray & Christmas Inc., showed companies announced 153,074 job cuts last month, almost triple the number during the same month last year and driven by the technology and warehousing sectors. It’s the most for any October since 2003, when the advent of mobile phones was similarly disruptive, said Andy Challenger, the company’s chief revenue officer.
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The Challenger report is “the biggest issue, suggesting the Fed is ‘wrong’ about putting the December cut in question,” said Michael Green, chief strategist and portfolio manager for Simplify Asset Management.
The yield on 10-year Treasuries slid eight basis points to 4.08%. Money markets are now implying a better than 70% chance of a Fed cut next month. A dollar gauge dropped 0.3%.
“We are sticking to our view that the Fed will deliver a follow-up 25 basis-point cut in December because restrictive Fed policy can worsen the already fragile employment backdrop,” said Elias Haddad at Brown Brothers Harriman & Co.
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Meanwhile, Fed Bank of Cleveland President Beth Hammack said inflation is a bigger risk than job weakness. Her Chicago counterpart Austan Goolsbee told CNBC that a lack of inflation data during the shutdown makes him uneasy about rate cuts. Governor Michael Barr said officials still have work to do on inflation while ensuring the labor market is solid.
Elsewhere, the US is pushing forward on President Donald Trump’s pledge to pause a series of penalties aimed at China’s shipbuilding industry, proposing pausing tariffs on imports of ship-to-shore cranes and chassis from China.
In commodities, gold steadied as traders weighed Fed comments and the jobs data, while oil extended declines after Saudi Arabia lowered the prices of its crude.
uploaded by Isabelle Francis
