By Ankur Banerjee
SINGAPORE, Jan 9 (Reuters) – Asian stocks drifted lower and the dollar stood tall on Friday ahead of a crucial jobs report, while investors girded for a Supreme Court ruling on the legality of President Donald Trump’s sweeping global tariff that jolted markets last year.
Simmering geopolitical tensions across the globe boosted oil prices, as well as defence stocks, and will remain in traders mind as they weigh developments in Venezuela after U.S. forces captured Venezuelan President Nicolas Maduro in a dramatic military raid in Caracas on Saturday
Much of the focus on Friday will be on the possible U.S. Supreme Court ruling on tariffs. Striking down the tariffs could impact government revenue, pushing Treasury yields higher and unleashing new waves of volatility across markets.
Kyle Rodda, senior financial markets analyst at Capital.com, said the Supreme Court ruling is the “real wildcard” for markets on Friday, noting that if the courts slap down U.S. tariffs, it would be a big boost to market sentiment.
“A constraint may be that even if the tariffs are ruled unlawful, the Trump administration is unlikely to roll over and will look to other ways to maintain the levies.”
For now, traders remain reluctant to place bets ahead of the market moving events. MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.3% in early trading, just below the record high it hit earlier in the week.
Japan’s Nikkei was up 0.8%, buoyed by the strong earnings and forecast from Fast Retailing, the operator of the Uniqlo clothing brand. European stock futures rose 0.4%. The S&P 500 ended the day flat, although an aerospace and defence index rose to an all-time high, with European defence shares also hitting a new high.
U.S. JOBS REPORT ON DECK
U.S. data on Thursday showed demand for labour remained sluggish, with businesses squeezing more output from their existing workforce, sharpening the focus on December’s employment report on Friday, which is expected to show that labour market is stuck in what economists and policymakers have called a “no hire, no fire” mode.
Nonfarm payrolls probably increased by 60,000 jobs last month after rebounding by 64,000 in November, a Reuters survey of economists estimated. The economy lost 105,000 jobs in October, the largest decrease in nearly five years, mostly federal government employees who took deferred buyouts.
Traders are pricing in at least two rate cuts from the Federal Reserve this year, although a divided central bank indicated in December there would be only one cut in 2026. The Fed is expected to keep rates steady at its meeting this month.
“We’d need a big downside surprise from the jobs data to really get the markets moving,” said Rodda. “That’s because a solid print would reassure investors that the U.S. labour market remains in a solid position and a slight miss will just raise the odds of more rate cuts.
The yield on benchmark U.S. 10-year notes eased a bit to 4.169% in early trading after gaining 4.5 basis points in the previous session. The dollar index, which measures the U.S. currency against six other units, inched higher hovering around a one month high against major currencies.
Meanwhile, Treasury Secretary Scott Bessent said on Thursday he expected Trump to make a decision soon on who will replace Jerome Powell as the Fed Chair. Powell’s term ends in May, with markets expecting Trump to appoint a dovish candidate.
Oil prices extended their gains on Friday, sitting near a two-week high as investors contended with developments in Venezuela and worried about supplies from Russia, Iraq and Iran.
Foreign embassies in Venezuela are beginning to arrange visits for next week that will include representatives for U.S. and European oil companies, two sources told Reuters, following Washington’s announcement of a $2 billion oil deal and the supply of U.S. goods to the South American country.
Brent futures rose 0.6% to $62.36 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 0.5% to $58.04. [O/R]
(Reporting by Ankur Banerjee in Singapore; Editing by Michael Perry)
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