Sentiment took a knock after a selloff in large-cap Wall Street tech firms. In addition, talks of rising U.S. interest rates also led to Asian shares risking to fall for a fourth straight session on Wednesday.
Limiting the early reaction were the holidays in Japan, China, and South Korea. This brought the MSCI’s broadest index of Asia-Pacific shares outside Japan to either side of flat.
Though shut for a holiday, the Nikkei futures in Japan traded down at 28,735. The last cash close before the holidays of Nikkei was 28,812.
A sharp pullback overnight caused the Nasdaq futures to solidify, while S&P 500 futures added 0.1%.
On Tuesday, the Nasdaq dropped 1.9%, with some big tech companies running into profit-taking. These include Microsoft Corp, Alphabet Inc, Apple Inc, and Amazon.com Inc.
U.S. Treasury Secretary Janet Yellen said rate hikes might be needed to stop the economy from overheating. With that, stretched valuations were tested.
On Friday, U.S. payroll data might show a hefty rise of 978,000. Some estimates might go as much as 2.1 million.
The Federal Reserve
According to Jerome Powell, so far, the labor market is still far short of where it needs to be to start talking of tapering asset buying.
On Tuesday, Minneapolis Fed Bank President Neel Kashkari said it might take a few years for the economy to get back to full employment.
From last week’s top of 1.69%, the Fed’s patience allowed yields on U.S. 10-year notes to ease back to 1.59%. However, the market has struggled to break below 1.53%.
Meanwhile, in currencies, higher U.S. rates were enough to help the dollar recover a little of its recent losses.
The euro has declined, returning to $1.2015. It also threatened to breach important chart support in the $1.1995/1.2000 area. A break would allow a retracement target at $1.1923.
The USD was a little firmer on the yen at 109.36 but faced resistance at 109.61. It rose to 91.282, away from a recent two-month low of 90.422.
The New Zealand dollar inched higher to $0.7160 when local jobs data proved stronger than expected.
In energy commodities, oil prices rose to seven-week peaks, with more countries opening their borders to travelers.