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Most Asian stock markets fell on Friday, while currencies held steady, as investors remained cautious ahead of the crucial US jobs report that could impact the outlook for further interest rate cuts and the dollar.

MSCI's gauge for emerging market stocks fell 0.5%, touching its lowest since September. The index has dropped more than 25% from its all-time high in 2021.

Stocks in Singapore fell 1.9%, pulling back further from a more than 17-year high scaled on Wednesday. The benchmark was on track for its worst day since early August 2024.

The Singapore dollar slipped 0.2%, while the Thai baht declined 0.3%.

The US nonfarm payrolls report, due later in the day, is expected to show that 160,000 jobs were added in December with unemployment holding at 4.2%.

A much stronger increase in jobs would bolster the case for fewer rate cuts by the Federal Reserve and likely strengthen the greenback, in light of recent data pointing to a resilient US economy.

The prospect of fewer rate cuts and uncertainty regarding President-elect Donald Trump's proposed tariff and immigration policies have led to a surge in global bond yields, supporting the dollar and keeping emerging market currencies under pressure this week.

"Asian markets have shown resilience due to attractive real rates, domestic support, and lack of fiscal concerns. However, we remain cautious on EMFX in the medium-term, given the potential impact of US policy on capital flows and the declining real yield cushion," Citi analysts said in a note.

"We believe the USD rally and reduced EM carry make EMFX vulnerable in the near term."

In Asia, the Bank of Korea (BOK) and Bank Indonesia (BI) will deliver their monetary policy decisions next week. Both central banks have already started their rate-easing cycle, but analysts believe they will likely hold rates this time.

"Outsized FX moves in December will ultimately constrain the BOK from lowering its policy rate in January," Barclays analysts said in a note.

The South Korean won declined 0.3%, while stocks closed 0.2% lower. The benchmark equity index rose 3% in its best week since mid-November, helped by hopes surrounding artificial intelligence technologies.

Equities in Indonesia climbed 0.6%, while the rupiah edged lower.

"While BI would likely prefer to resume its rate-cutting cycle, we believe pressures on the IDR (rupiah) override the central bank's pro-growth instincts," Barclays analysts said.

Markets are awaiting inflation data from India and retail sales and GDP data from China next week.

Source: Theedgemarkets

Global stocks are likely to rally 10% this year, underpinned by robust corporate earnings growth and equity gains broadening outside the US, according to Citigroup Inc strategists.

Strategist Beata Manthey expects global earnings to also rise 10% as economic growth remains resilient, although she warned of risks over the policies of incoming US President Donald Trump. She retained a preference for US stocks, while Europe is the “favourite” pick for diversifying into sectors linked to the economic cycle.

“The macro picture remains supportive of additional corporate earnings growth and equity market gains,” Manthey wrote in a note, adding that she expects the US to continue outperforming until greater clarity on Trump’s policies, a softer stance on tariffs and a weaker dollar boost international equities.

The MSCI All-Country World Index has stalled in the new year after rallying more than 50% since the lows of 2022, as investors worry that potentially sweeping tariffs from the US could disrupt global trade. Political uncertainty in Europe and a stunted Chinese economy have also weighed on sentiment.

In the US, the focus is on whether the gains can spread to sectors beyond technology, after only a handful of heavyweights drove the rally in the past two years on optimism around artificial intelligence.

Citi’s Manthey said she expects the earnings gap between the Magnificent Seven group of tech stocks and the rest of the S&P 500 index to narrow this year.

Source: Theedgemarkets

Swiss banks have lowered their profit expectations for the coming years due to falling interest rates and despite higher credit demand after Credit Suisse's 2023 collapse, Ernst and Young (EY) said on Thursday.

Some 40% of 100 banks questioned in an annual survey ahead of the banking results reporting season said they expect profit to decline over the next 1-2 years, although 85% think operating profit will rise again in the longer run, the consultancy said.

The more cautious outlook follows record results for many Swiss banks in 2023.

Lower interest rates will dent banks' income statements, said EY Managing Partner Patrick Schwaller, who said Swiss banks were also finding it harder to increase lending volumes.

"Now we are seeing for the first time that the bank balance sheet is once again becoming a limiting factor," Schwaller told reporters in Zurich.

The collapse of Credit Suisse led to an increase in demand for banking services from its former customers, but the survey found that did not necessarily result in new business.

Smaller banks were often unable or unwilling to take on former Credit Suisse clients because they lacked the scale or were wary of taking over some banking relationships.

"A bad deal from a risk perspective remains a bad deal," said EY Manager Fredrik Berglund.

Looking ahead, cost reductions, efficiency improvements and artificial intelligence will be big topics in the Swiss banking sector, EY said.

"AI is the biggest lever for banks to realise more value for the customer and the bank," said EY Partner Marcel Zuend. "We expect the journey to accelerate significantly over the next 12 months."

Source: Theedgemarkets

UNEXPECTED, YET FREQUENT: STOCK MARKET SURGES NEARLY 30%

DECEMBER DEBT CEILING UPDATE

HIGH YIELD JANUARY EFFECT

U.S. ON TOP, BUT OTHER REGIONS WERE SOLID

AI SURGE

Source：Northerntrust