(Bloomberg) -- Stocks edged lower in Asia after US equities struggled for direction, with traders awaiting a jobs report later Friday for clues on the Federal Reserve's next policy steps.
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Shares declined in Japan, South Korea and Australia. Futures for Hong Kong indicated gains. Contracts for the S&P 500 slid after the index edged lower during the US session. The gauge earlier this week rallied on Fed Chair Jerome Powell's signals of a downshift in the pace of hikes.
The Bloomberg Dollar Spot Index steadied after sinking to its lowest since June. The yen fluctuated after a fourth straight daily advance.
Australian and New Zealand government bond yields slid, following the lead from Treasuries on Thursday, when their rally gathered steam amid a pullback in expectations for Fed tightening. The 10-year US benchmark hovered around 3.52% during Asian trading.
Bets on where the central bank rate will peak have now dropped below 4.9%, according to swap markets. The current benchmark sits in a range between 3.75% and 4%.
Fed Bank of New York President John Williams said further hikes are needed to curb inflation. The central bank's Vice Chair for Supervision Michael Barr said officials have more work to do in tightening monetary policy, though they could slow the pace of rate increases later this month.
Data showing American manufacturing contracted in November for the first time since May 2020 added to concern that Fed hikes will raise the odds of a recession.
The remarkably resilient US jobs market is beginning to cool, but Friday's employment report may fall far short of the turning point Fed officials are seeking in their battle to beat back inflation. There are signs labor demand is ebbing, but a bigger slowdown is needed to bring that demand more in line with labor supply in order to contain wage growth.
In South Africa, the political turmoil risks sending the financial market into deeper rout, with the rand coming off its worst one-day loss since May and yields on the 10-year sovereign bond rising most since 2015.
Elsewhere, oil fluctuated after four days of gains with China further easing Covid restrictions and the US considering a pause in sales from its strategic reserves. Gold steadied.
Key events this week:
US unemployment, nonfarm payrolls, Friday
ECB's Christine Lagarde speaks, Friday
Some of the main moves in markets as of 7:38 a.m. Tokyo time:
Stocks
S&P 500 futures fell 0.3% as of 9:26 a.m. Tokyo time. The S&P fell 0.1%
Nasdaq 100 futures fell 0.4%. The Nasdaq 100 rose 0.1%
Japan's Topix index fell 1.6%
South Korea's Kospi index fell 0.8%
Australia's S&P/ASX 200 Index fell 0.7%
Hong Kong's Hang Seng futures rose 0.4%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0514
The Japanese yen was little changed at 135.46 per dollar
The offshore yuan fell 0.1% to 7.0490 per dollar
Cryptocurrencies
Bitcoin rose 0.3% to $16,977.32
Ether fell 0.1% to $1,274.83
Bonds
The yield on 10-year Treasuries advanced two basis points to 3.52%
Australia's 10-year yield declined nine basis points to 3.39%
Commodities
West Texas Intermediate crude was unchanged at $81.22 a barrel
Spot gold fell 0.1% to $1,800.86 an ounce
This story was produced with the assistance of Bloomberg Automation.
--With assistance from Rita Nazareth.
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