Asian equity markets presented a fragmented picture on Friday, mirroring a subdued session on Wall Street. Investors grappled with mixed signals from the latest US economic indicators, which failed to provide clear direction on the Federal Reserve's imminent interest rate decision scheduled for next week.
Regional Market Performance: A Tale of Divergence
The trading session saw notable declines in some key indices. Hong Kong's Hang Seng (HSI) dropped 63 points, or 0.24%, to settle at 25,872. Japan's Nikkei also pared its earlier gains, tumbling sharply by 702 points to close at 50,326. In contrast, mainland Chinese markets managed to eke out gains. The Shanghai Composite edged up by 0.08% to 3,878 points, while the Shenzhen Component rose 0.39% to reach 13,057.
South Korea's Kospi emerged as a strong performer, registering a gain of 0.99% to reach 4,068 points as of 9:50 AM IST. This mixed performance across the region highlights the prevailing uncertainty among global investors.
US Data and Fed Watch: The Central Focus
The market's tentative mood stems from conflicting economic signals from the United States. A report from payrolls firm ADP indicated a loss of over 30,000 jobs in November, reinforcing views of a softening labour market. However, Thursday's data on weekly jobless claims and layoffs came in slightly better than economists had anticipated.
Despite this ambiguity, market participants remain highly confident of an interest rate cut at the Federal Reserve's meeting next Wednesday, with pricing indicating a probability of around 90%. The immediate focus is now squarely on the Personal Consumption Expenditures (PCE) index, the Fed's preferred inflation gauge, due for release later on Friday. Analysts suggest that a reading below forecasts could bolster expectations for further rate reductions into 2026. Data on US income and consumer spending will also be closely scrutinised.
Reflecting this wait-and-see approach, Wall Street ended its previous session on a quiet note. The S&P 500 and Nasdaq posted minor gains, while the Dow Jones Industrial Average slipped marginally.
Domestic Spotlight Shifts to the Reserve Bank of India
Back in Asia, the financial spotlight will soon turn to the Reserve Bank of India (RBI) and its upcoming monetary policy announcement. There is growing speculation that the central bank might announce a rate cut to support economic growth.
A Bloomberg survey of 44 economists suggests the RBI could lower interest rates by a quarter point to 5.25%. This potential move comes amid a global environment where other central banks are also considering or have already begun monetary easing, as hinted by recent comments from officials. The RBI's decision will be a critical determinant for Indian market sentiment and the broader economic trajectory in the coming months.
