Japan’s Nikkei, Wall Street fall on Fed rate cut uncertainty as tech stocks slip

Asian stock markets fell further on Friday, extending a global selloff as the highly anticipated U.S. jobs data offered little clarity on the near-term trajectory of interest rates, prompting investors to retreat from risk assets despite Nvidia’s strong earnings.

Wall Street tumbled overnight, with concerns over overvalued tech stocks resurfacing, leading to the Nasdaq’s largest single-day swing since April 9, when President Donald Trump’s “Liberation Day” tariffs rattled markets. S&P 500 closed 1.56 percent lower, while Nasdaq dipped 2.15 percent.

U.S. jobs data pressures Asian market

U.S. data showed that the economy added significantly more jobs than expected in September, yet a rise in the unemployment rate and downward revisions to previous months created an ambiguous outlook for the Federal Reserve as it weighs the possibility of a rate cut next month.

In the Asian stock market, MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 2.31 percent, extending its weekly loss to more than 3 percent, the largest decline since early April. Japan’s Nikkei fell 2.43 percent and closed the week down 2.8 percent.

The Taiwan Weighted Index slipped 3.61 percent, while South Korea’s Kospi fell 3.72 percent. Chinese stock markets also witnessed declines, with blue-chip stocks dropping 2.01 percent and Hong Kong’s Hang Seng Index declining 1.56 percent.

Nvidia shares slide following gains on strong earnings

The latest decline in shares comes after a major tech-driven rally in the previous session, supported by Nvidia’s standout earnings. Technology-driven markets in Japan, South Korea and Taiwan led the gains after Nvidia CEO Jensen Huang highlighted robust demand for the company’s AI chips from major cloud providers, downplaying fears of an AI-driven market bubble.

The optimism was backed by the world’s most valuable company projecting quarterly revenue well above Wall Street expectations, easing some of the AI-driven valuation concerns that had weighed on markets in recent sessions.

In its quarterly earnings report on Wednesday, Nvidia announced that revenue for the three months ending in October surged 62 percent to $57 billion, fueled by strong demand for chips used in AI data centers. Sales from that segment alone rose 66 percent to over $51 billion. The company’s fourth-quarter revenue forecast of around $65 billion also exceeded analyst expectations, lifting Nvidia shares roughly 4 percent in after-hours trading.

The company’s shares are currently trading 0.25 percent higher in after-hours trading at $181.10, after closing down 3.15 percent.

Read: UAE gold prices decline AED4 as traders pare back December interest rate cut hopes

European shares rise as dollar strengthens

Fed officials struck a cautious tone overnight on inflation, with some expressing growing concerns about financial market stability, including the risk of sharp asset price declines, as debates continue over the timing, and even the necessity, of further rate cuts.

Cleveland Fed President Beth Hammack warned that additional rate reductions carry a broad range of economic risks, while Fed Governor Lisa Cook highlighted the potential for outsized drops in asset prices.

In European stock markets, the EURO STOXX 50 rose 0.50 percent, Germany’s DAX gained 0.5 percent, and France’s CAC 40 edged up 0.34 percent.

In currency markets, the U.S. dollar surged against risk-sensitive commodity currencies, reaching a three-month high against the Australian dollar and a seven-month peak versus the New Zealand dollar, though both pared some gains on Friday.

The yen briefly strengthened after Japanese Finance Minister Satsuki Katayama signaled that intervention could be possible to counter excessive volatility and speculative moves. It was steady at 157.40 per dollar after hitting a 10-month low of 157.9 overnight, pressured by expectations of a massive economic stimulus package exceeding 20 trillion yen from Japan’s new government, set for announcement later on Friday.

In commodities, oil prices continued their overnight decline on Friday as the U.S. pressed Ukraine to accept a peace deal with Russia. U.S. West Texas Intermediate fell 1 percent to $58.38 a barrel, bringing its weekly loss to 2.8 percent. Meanwhile, spot gold edged down 0.2 percent to $4,069 per ounce, remaining largely unchanged overnight.