Japan’s Nikkei falls as Nasdaq, S&P 500 futures rise and European stocks gain

Asian stock markets rose on Friday as investors remained cautious ahead of a key U.S. inflation report that could influence a Federal Reserve that appears increasingly split on its next policy move.

Meanwhile, Japan’s Nikkei fell sharply on Friday, erasing its gains for the week. The Nikkei 225 dropped 1.05 percent after disappointing household spending data highlighted the pressure of persistent inflation and strengthened expectations of a rate hike later this month. The index was on course to finish the week little changed.

BOJ rate cut bets rise

European stock markets were set for a positive start, with EURO STOXX 50 futures rising 0.14 percent and FTSE futures gaining 0.02 percent. U.S. futures also showed modest gains, with Nasdaq futures up 0.37 percent and S&P 500 futures rising 0.21 percent.

The market now sees a 75 percent chance of a 25-basis-point rate hike from the Bank of Japan later this month, after Governor Kazuo Ueda said on Monday that the central bank would carefully consider the “pros and cons” of raising rates.

The dollar slipped 0.3 percent to 154.61 yen, remaining well below its 10-month peak of 157.9. Meanwhile, the broader MSCI Asia-Pacific index excluding Japan rose 0.77 percent, putting it on track for over a 1 percent weekly gain. Most Asian stock markets posted modest increases, with South Korea’s Kospi leading with a 1.78 percent rise.

Hong Kong’s Hang Seng index was up 0.63 percent, while Taiwan’s TAIEX closed 0.67 percent higher.

Read: UAE gold prices rise to AED508 as global rates gain on weaker dollar

Amazon pressures S&P 500 gains

In the U.S. stock market, the S&P 500 closed the previous session 0.11 percent higher, though gains were pressured by a 1.41 percent drop in Amazon shares. The Dow Jones Industrial Average fell 0.067 percent, while the Nasdaq Composite rose 0.22 percent.

In currencies, the dollar came under renewed pressure after stabilizing overnight following nine consecutive sessions of losses. The dollar index fell 0.1 percent on Friday to 99 against major currencies, marking a 0.5 percent drop for the week. The broad weakness reflects market expectations that the Federal Reserve is highly likely to cut interest rates by 25 basis points next Wednesday.

Although markets are roughly 90 percent priced for a Fed rate cut, the decision could be one of the most contentious in years, with as many as five of the 12 voting members publicly opposing further rate reductions.

Investors are now awaiting the U.S. Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation measure, scheduled for later in the day. The data, covering September, is expected to show a 0.2 percent rise in the core measure, keeping the annual rate steady at 2.9 percent.

Meanwhile, the U.S. non-farm payrolls report will not be released on Friday. Thursday’s data showed jobless claims fell sharply last week, easing fears of a sharp labor market slowdown, though the decline may have been influenced by the Thanksgiving holiday.

In commodities, Brent crude fell 5 cents, or 0.08 percent, to $63.21 per barrel. The contract was largely stable during the week. Meanwhile, U.S. West Texas Intermediate (WTI) declined 11 cents, or 0.18 percent, to $59.56 a barrel. Despite today’s decline, WTI logged a weekly gain of about 1.6 percent and marked a second straight week of increase.

Spot gold was up 0.35 percent to $4,228.01 per ounce as of 6:27 GMT and was set for a 0.3 percent weekly drop. Meanwhile, U.S. gold futures inched up 0.35 percent to $4,258.05 per ounce.