Stocks in Asia slipped in Friday morning trade, amid expectations the U.S. Federal Reserve could be less aggressive than expected with monetary policy when it meets next week.
The Nikkei 225 in Japan slipped 0.55% in morning trade, as shares of index heavyweight Softbank Group traded fractionally higher after the conglomerate announced that it will set up Vision Fund 2, the sequel to its landmark investment fund. The Topix index declined 0.64%
Shares of automaker Nissan Motor dropped more than 2%, after the company announced Thursday it would slash 12,500 jobs worldwide following a 95.5% drop in its first-quarter operating profit.
Mainland Chinese shares also dipped in early trade, as the Shanghai composite declined 0.23% and the Shenzhen component shed 0.21%. The Shenzhen composite also slipped 0.146%.
Hong Kong’s Hang Seng index fell 0.64%, after the city reported Thursday that it saw its biggest annual drop in exports in almost three and a half years in June.
In South Korea, the Kospi declined 0.85%. Australia’s S&P/ASX 200 also shed 0.34% as most of the sectors fell.
Overall, the MSCI Asia ex-Japan index slipped 0.64%.
Asia-Pacific Market Indexes Chart
Overnight stateside, the Dow Jones Industrial Average closed 128.99 points lower at 27,140.98, while the S&P 500 shed 0.5% to end its trading day at 3,003.67. The Nasdaq Composite dropped 1% to close at 8,238.54.
Concerns rose that the Fed may be less aggressive than expected on monetary policy when it meets next week. That came after European Central Bank (ECB) President Mario Draghi said the risk of a recession in the region was low despite earlier signalling a rate cut and more monetary easing ahead.
Some traders took this to mean the central bank would not be as aggressive in its easing measures and that the Fed could follow suit when it meets next week.
“The ECB disappointed markets looking for a ‘whatever its takes’ moment; as the shortfall on conviction, commitment and details overtook the dovish stance and easing bias,” Vishnu Varathan, head of economics and strategy at Mizuho Bank, wrote in a note.
“The ECB’s fizzle, rather than sizzle, raises questions about (Federal Open Market Committee) expectations for next week; and markets may have a weekend of soul-searching ahead,” he added.
William Adams, senior economist at PNC, however, told CNBC’s “Squawk Box” on Friday that he’s looking at a 25 basis points cut in July and another one in October. “We see these as insurance cuts to prolong … the expansion, not because we’re headed to a recession in the near term in the United States.”
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.776 after falling below 97.6 yesterday.
The Japanese yen, widely viewed as a safe-haven currency, traded at 108.65 against the dollar after weakening sharply from levels below 108.4 in the previous session. The Australian dollar was at $0.6943 after slipping from levels above $0.696 yesterday.
Oil prices were subdued in the morning of Asian trading hours, with international benchmark Brent crude futures slipping 0.3% to $63.20 per barrel, while U.S. crude futures were largely flat at $56.03 per barrel.
Here’s a look at what’s ahead for the day:
- Indonesia: Exports, regional GDP
- Japan: Earnings for Tokyo Electron, NTT Docomo, Kansai Electric
- South Korea: Samsung Engineering earnings
— CNBC’s Fred Imbert contributed to this report.
