Stock market today: Asian shares slide further as rate cut, tariff worries hit market sentiment
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Shares fell Friday in Asia after U.S. markets were closed to observe a National Day of Mourning for former President Jimmy Carter. U.S. futures were lower and oil prices advanced. Regional markets saw a broad decline that analysts said reflects weakening confidence about the chances of further interest rate cuts by the Federal Reserve given recent data showing unexpected strength in the U.S. economy.
Minutes from a Dec. 17-18 meeting released this week showed Fed officials expected to dial back the pace of interest rate cuts this year in the face of persistently elevated inflation and the threat of widespread tariffs increases under President-elect Donald Trump and other potential policy changes.
The Fed’s staff economists considered the U.S. economy’s future path particularly uncertain at the December meeting, in part because of the incoming Trump administration’s “potential changes to trade, immigration, fiscal, and regulatory policies,”.
Attention was focused on a U.S. non-farms jobs report due from the Labor Department later in the day. “It appears that markets, at some level, are fretting (over) the risk that the Fed will keep policy a lot more restrictive than is conducive for sustaining unbridled ‘risk on,’” Tan Jing Yi of Mizuho Bank said in a commentary.
Uncertainties over how aggressively might pursue higher tariffs against China and other countries once he takes office also have left investors cautious just days ahead of the Jan. 20 inauguration. “Increased tariffs against Chinese goods are a given, but it is unclear which other economies in the region will be targeted and whether universal tariffs are still on the table,” ANZ Research said in a report.
