Asian Markets Brace for Wall Street’s Decline

(Bloomberg) — Asian stocks are set to mirror the downturn seen on Wall Street as investors assess the repercussions of a potential trade conflict alongside strong data from the US regarding housing and employment.

Market Overview

Equity index futures for Japan, Australia, and Hong Kong showed slight losses. The S&P 500 finished marginally lower on Thursday, indicating fragile investor sentiment just a week after it entered correction territory. Additionally, a key index of US-listed Chinese stocks dropped by 3.8%.

Global Market Sentiment

The muted performance in the US stalled an emerging recovery in global stock markets, which had previously reached a two-week high. The slowdown on Wall Street comes just ahead of a critical event on Friday, where $4.5 billion in options contracts will expire in what’s termed “triple witching,” a circumstance often linked to heightened market volatility.

Market Indicators

Treasuries remained stable on Thursday, while the dollar index advanced for a second consecutive day. The Japanese yen held its ground early Friday, trading at approximately 148 per dollar, reflecting stability from the previous session. The British pound posted losses as the Bank of England chose to maintain interest rates in a tumultuous global environment.

Investor Caution

The lack of significant movement across global markets signals apprehension among investors as they consider the potential for increased tariffs, assess the robustness of the US economy, and evaluate whether US stocks can recover from their February peak.

US Economic Data

US existing home sales surpassed analysts’ expectations, while initial jobless claims aligned with forecasts, underscoring a strong labor market. Daniel Skelly of Morgan Stanley’s Wealth Management noted, “Although we might have hit the bottom of the recent correction, we likely have not seen the last of the volatility.”

Policy Developments and Corporate News

After a week of maintaining interest rates, Federal Reserve Chair Jerome Powell played down growth fears and the potential impacts of a trade war on prices. Meanwhile, Apple Inc. has made executive changes to stimulate its artificial intelligence initiatives, and FedEx Corp.’s stock fell following a lowered profit outlook. In contrast, Micron Technology Inc. provided a positive sales forecast, while Nike Inc. exceeded analyst expectations with its results.