Global Rally Stalls as Fed Uncertainty Looms – Asia Market Wrap

A seven-day global stock rally lost steam in Asia, as uncertainty over the Federal Reserve’s rate-cut trajectory sapped investor appetite for risk.

The MSCI All Country World Index fell 0.2% as Asian stocks broke their longest winning streak since January. Shares in Hong Kong dropped 1.1% while the Topix index fell 0.8% in a retreat from its record-high close Thursday. The dollar rose 0.2% after President Donald Trump said firing Federal Reserve Chair Jerome Powell wasn’t necessary.

Treasuries were flat after two days of declines. Gold held its drop while Bitcoin slumped 3%. Equity-index futures for the US rose 0.2% while contracts for Europe fell 0.1%.

Strong jobs data Thursday further eroded the case for interest rate cuts by the Fed. While traders weren’t anticipating a reduction next week when the US central bank meets, expectations for easing later this year were pared to less than two cuts after data showed jobless claims fell for a sixth straight week.

Trading desks at firms including Goldman Sachs and Citadel are telling clients to buy cheap hedges against potential losses in US stocks as a slew of risks loom over the market’s record advance.

Major indexes have soared as the US inks trade deals amid a solid earnings season. Wall Street’s so-called fear gauge hasn’t been this low since February, and the S&P 500 Index has rallied 28% since April 8. The S&P 500 inched to a new record Thursday – its 10th in 19 days – on tech gains.