February 03, 2022: Asian markets were mixed Thursday, with a split between those suffering from profit-taking following a recent rally and those that were playing catch-up after a midweek break across much of the region.
Wall Street provided another healthy lead after rising for a fourth day — helping pare January's steep losses — but the positivity was dealt a blow after the close as Facebook parent Meta's sobering earnings fuelled fresh worries about the tech sector.
The gloomy mix of a sharper-than-expected drop in profit, a decrease in users and threats to its ad business followed disappointing results from streaming titan Netflix, indicating the pandemic-era sugar rush enjoyed from people being holed up at home has come to an end.
The weak readings provided a reality check that while the world economy is on the mend and many firms such as Apple are enjoying healthy earnings — despite higher inflation and looming interest rate hikes — the coming year is unlikely to be straightforward.
In early Asian trade, Tokyo, Sydney, Wellington, Manila and Jakarta all fell, having enjoyed a very strong week so far. However, Singapore and Seoul were both up around two percent on their first day back after the Lunar New Year break.
Hong Kong, Shanghai and Taipei were still closed. US futures turned sharply lower with Meta plunging about 20 percent in after-hours trade.
Meanwhile, traders are also still obsessing over the Federal Reserve's timetable for hiking interest rates, with speculation rife over how much it will raise them in March and how many more times this year.
Several officials have come out in recent days to soothe concerns about a hard and fast approach, though January inflation data released next week will be closely watched for an idea about the central bank's plans.
Private jobs data Wednesday did little to provide any clarity, with more than 300,000 jobs lost in the sector — against an expected rise of 180,000 — but officials put that down to the impact of Omicron, which saw millions of people infected during the time of the survey.
Still, National Australia Bank's Rodrigo Catril said a big miss in Friday's closely watched official figures could affect the Fed's planning.
“Overall, there is a general sense that this is a temporary setback which arguably could extend into February, making interpretation of the state of the US labour market a difficult task over the near term,” he said in a note.
“Forecasts for Friday's payrolls are now all over the place with many calling for a negative print in January.
“Depending on the magnitude of the disruption, this can potentially become a solid excuse for the Fed to wait on the sidelines after a first rate hike in March,” he added.
“A theme to watch, but for now this is yet another reason to push back on the notion of more than four rate hikes this year.”
Before the upcoming jobs reading, focus is on Thursday's meetings of the European Central Bank and Bank of England. While the latter is tipped to unveil another rate hike to help curtail surging prices, the ECB is tipped to remain unmoved.
However, while officials in Frankfurt continue to insist the upward price pressures are temporary, they will be coming under pressure to act after data Wednesday showed inflation at a record high.