Asian markets extended their losses on Tuesday, mirroring Wall Street’s decline, as investors positioned themselves ahead of key US jobs and inflation data releases. The tech sector, which has driven market gains this year, is now a source of concern due to worries over a potential bubble. Investors are questioning the massive investments in artificial intelligence and the implications of the Federal Reserve’s potential pause on interest rate cuts.
The US jobs data for November, as well as the delayed October figures, are set to be released later in the day, followed by the consumer price index on Thursday. These readings will be closely scrutinized for insight into the Fed’s plans for borrowing costs, as officials debate whether to continue lowering interest rates in January. Recent comments from decision-makers indicate a split within the policy board, with some warning that rates are still too high, while others believe they are at the right level.
The Fed’s path forward will be influenced by the upcoming data releases, according to Matt Weller, head of market research at City Index. “After essentially missing the October jobs report due to a lack of survey data, the Fed will closely scrutinize the November figures when setting out the path of monetary policy through early 2026,” he said. However, traders are currently pricing in only a one-in-four chance of another rate cut in January, which may limit the market reaction to the release unless it shows a significant deterioration in the labor market.
As a result, equity traders have turned sellers, with Tokyo, Hong Kong, Shanghai, Seoul, and Taipei all losing over 1% on Tuesday. Sydney, Singapore, and Jakarta also fell, while worries over the tech sector weighed on sentiment. Recent warnings about an AI-fuelled bubble, compounded by weak earnings from Oracle and Broadcom, have contributed to the decline.
The downbeat mood on equity markets has also affected the crypto sphere, with bitcoin falling to $85,171, while gold moved back above $4,300. The yen held gains against the dollar ahead of an expected rate hike by the Bank of Japan on Friday. As investors await the key US data releases, the global market remains subdued, with all eyes on the potential implications for interest rates and the tech sector.
Key figures at 0230 GMT included the Tokyo Nikkei 225 down 1.3% at 49,523.56, the Hong Kong Hang Seng Index down 1.7% at 25,205.57, and the Shanghai Composite down 1.1% at 3,825.00. The euro/dollar was up at $1.1754, while the dollar/yen was down at 154.90 yen. The pound/dollar was down at $1.3370, and the euro/pound was up at 87.92 pence. West Texas Intermediate crude was down 0.3% at $56.64 per barrel, and Brent North Sea crude was down 0.4% at $60.35 per barrel.