Asian markets began Friday with renewed intraday volatility after a string of U.S.-focused developments altered trader expectations. President Donald Trump said he supported a bipartisan deal to prevent another government shutdown and indicated he has decided whom he will nominate to chair the Federal Reserve. Those comments coincided with mixed corporate earnings from major U.S. technology companies and animated moves across currencies, precious metals, oil and government bonds.
MSCI’s broadest index of Asia-Pacific shares outside Japan traded erratically and was last down 0.2%, extending a slide from the previous day even as the index remains on track for its best monthly performance in more than three years. S&P 500 e-mini futures slipped 0.4%, while Nasdaq e-mini futures were off 0.5% in early Asian hours.
Market participants parsed competing narratives: progress on a shutdown-averting deal would typically bolster U.S. Treasury yields and the dollar, whereas a breakdown in talks would likely push markets to respond to headlines and could disrupt the timeliness of key economic releases. "Progress toward averting a shutdown would reinforce U.S. yields and the dollar, while heightened shutdown risk would shift markets to headline-driven moves amid possible data delays," said Shoki Omori, chief desk strategist for rates and FX at Mizuho in Tokyo.
Wall Street’s most recent session showed the stresses felt when headline or earnings risk re-emerge. The S&P 500 closed down 0.1% and the Nasdaq Composite fell 0.7% after Microsoft delivered a weaker-than-expected update on its cloud business, reviving broader concerns about valuations in the technology sector. Analysts at Westpac captured the mood, writing: "There was plenty of drama in the markets. Sentiment shifted during U.S. trading hours when concerns about equity valuations in the technology sector resurfaced."
With just under one-third of S&P 500 firms having reported results, roughly 76% have beaten consensus earnings estimates so far. Nevertheless, the earnings season has produced a patchwork of outcomes among the big technology names that exert outsized influence on index performance. Microsoft’s shares plunged 10% on Thursday, erasing more than $350 billion of market value amid disappointment around its cloud performance. By contrast, Meta rose 10% after investors rewarded the company’s AI-driven ad targeting and a bullish first-quarter outlook. Apple surprised with a forecast calling for up to 16% revenue growth in the March quarter, a figure well ahead of Street expectations and attributed to resilient iPhone demand and a marked recovery in China.
Equity moves were accompanied by notable activity in fixed income and currency markets. The U.S. dollar index, measuring the greenback against a basket of six currencies, was last up 0.3% at 96.441 following Mr. Trump’s comment that he would reveal his Fed nominee. On the political speculation front, prediction market contracts on Polymarket showed a sharp increase in the implied probability that former Fed Governor Kevin Warsh would be nominated, with that probability rising to 88%.
Yields on U.S. Treasuries climbed; the 10-year Treasury yield was last up 3.8 basis points at 4.263%. Fed funds futures trimmed a touch of probability that the Federal Reserve will hold at its next policy meeting, with markets pricing an 86.6% chance of unchanged rates at the two-day meeting beginning March 18, compared with 87.5% a day earlier, according to the CME Group’s FedWatch tool.
Precious metals saw a setback following a turbulent prior session. Spot gold was down 0.7%, quoted at $5,357.9404, while silver eased 0.2% to $115.89. Chris Weston, head of research at Pepperstone Group in Melbourne, noted the mechanical element to the move: "The liquidation of what had become some grossly extended positioning ... is not overly surprising, particularly in the precious metals space."
Energy markets were likewise jittery. West Texas Intermediate crude last traded down 0.7% at $64.95 as prices reacted to a mix of geopolitical considerations and U.S. policy steps. On Thursday the president signed an executive order declaring a national emergency and set out a mechanism to impose tariffs on goods from countries that sell or provide oil to Cuba. In addition, Mr. Trump said he planned to speak with Iran amid heightened tensions, comments that compounded uncertainty for oil and risk assets.
Cryptocurrencies retreated after a volatile session. Bitcoin was last down 2.0% at $82,684.51, while ether was down 1.7% at $2,768.01.
Across markets, the interaction of U.S. political developments, a handful of influential corporate earnings reports and positioning-driven moves in commodities and FX created a day of uneven performance. Investors remained attentive to any further announcements related to U.S. shutdown talks and the expected Fed nomination, both of which have the capacity to sway rates, the dollar and risk sentiment in the near term.