Asian shares were mixed on Friday as caution about a U.S. jobs report jostled with signals from the European Central Bank that it is willing to take further steps to shore up the European economy.
MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.2 percent after rising in early trade. They’ve fallen 3.4 percent this week.
Japan’s Nikkei fell 0.9 percent, extending losses this week to 6.0 percent.
Wall Street shares ended up on Thursday, though they pared back much of earlier gains.
The S&P 500 gained 0.1 percent but the Nasdaq Composite ended 0.4 percent lower.
“Markets sold off after the early bounce in accordance with the U.S. equity markets,” said Nicholas Teo, analyst at online trading platform provider CMC Markets in Singapore. “Only one theme on every trader’s mind today – U.S. jobs report tonight. And how that may possibly play on the Fed’s September rate decision.”
A strong jobs number could cement optimism on the global economy and boost share prices but it could rekindle speculation of an early rate hike, which could hurt risk assets, particularly in emerging economies.
Economists polled by Reuters expect the U.S. economy to have produced 220,000 new non-farm jobs last month, continuing the robust employment creation of the past five years, while average hourly earnings are predicted to have risen by a modest 0.2 percent, as they did in July.
A drop in average prices charged by U.S. service businesses in August after 25 months of increases supports the case for a delay in rate hikes even though the overall service sector expanded at the fastest pace since May. [ID: nN9N10A02H]
While the Fed has so far stuck to its script that interest rates will likely be raised this year, the ECB is tilting towards more easing.
It cut its growth and inflation forecasts on Thursday, warning of possible further trouble from China and paving the way for an expansion of its already massive 1 trillion-euro plus asset-buying programme.
For the first time, ECB President Mario Draghi also said explicitly the bond-buying programme may run beyond September 2016 and the bank may adjust its size and composition.
“It looked as if the ECB is preparing stimulus,” said Masahiro Ichikawa, senior strategist at Mitsui Sumitomo Asset Management. “As it cut its growth projections and uncertainty over emerging economy is rising, it probably had to show that it is ready to take action.”
That pushed down German 10-year yields, the benchmark for euro zone borrowing costs, to 0.725 percent, compared to a two-week high of 0.82 percent hit on Monday.
The euro also fell to a two-week low of $1.10875 and it last fetched $1.1128. Against the yen, the common currency hit three-month low of 133.135 yen.
In commodities markets, which have been battered by fears of a hard landing in China, trade remained highly volatile.
After gains in early trading, Brent crude futures slipped 0.5 percent to $50.44 per barrel.
Copper fell 0.8 percent to $5,203 per tonne after surging to $5,314 on Thursday, its highest in over three weeks, as bearish investors closed out positions ahead of U.S. job data.
Aluminium also shot up, touching a one-month peak on the London Metal Exchange on Thursday.
China’s financial markets were closed on Friday for a national holiday.