Markets across Asia experienced another day of negative sentiment Friday, with investors pulling back from technology stocks despite seemingly strong earnings reports and remaining cautious about escalating Middle East tensions.
Stock exchanges in Japan mirrored Thursday’s decline on Wall Street, even after artificial intelligence leader Nvidia delivered earnings that exceeded expectations. Meanwhile, the Japanese yen and U.S. Treasury bonds gained value as investors sought safer investments, while gold prices remained stable following two consecutive days of increases.
Despite an encouraging update from an Omani official mediating discussions between the United States and Iran regarding nuclear negotiations, energy markets remained volatile with concerns about potential military action still looming.
“AI and geopolitics remained front and centre for financial markets, prompting a retreat from risk assets and a shift towards safe havens,” Mantas Vanagas, senior economist at Westpac Group, wrote in a note.
“With no major breakthroughs announced in the U.S.–Iran talks, crude markets remained in wait-and-see mode, continuing to price in a significant risk of military escalation between the two countries,” he said.
The MSCI Asia-Pacific index excluding Japan dropped 0.4%, while Tokyo’s Nikkei fell 0.8%.
Despite Nvidia reporting stronger-than-anticipated January quarter results Wednesday and projecting current quarter revenue above analyst predictions, U.S. markets closed lower and the chip maker’s shares remained unchanged in extended trading.
American stock futures continued sliding during Asian hours, with S&P 500 contracts down 0.41% and technology-focused Nasdaq 100 futures falling 0.36%.
“It seems ‘the Street’ simply wanted more, or perhaps just isn’t prepared to chase the stock at its current lofty valuation,” IG market analyst Tony Sycamore said about Nvidia’s results in a note.
The dollar index measuring the greenback against major currencies edged up 0.04% to 97.77, with the euro holding steady at $1.1797.
Japan’s currency gained 0.2% to 155.86 per dollar, while the British pound remained unchanged at $1.3482.
Following meetings in Switzerland, Omani Foreign Minister Sayyid Badr Albusaidi announced on X that the United States and Iran would continue nuclear program discussions after consulting with officials in their respective capitals.
Significant progress in these talks could reduce the likelihood of President Donald Trump following through on threatened military strikes against Iran, which many experts worry could trigger broader regional conflict.
U.S. Treasury yields declined, with the benchmark 10-year note falling 1.5 basis points to 4.002% and the 30-year bond dropping 1.3 basis points to 4.6565%.
Japanese economic data revealed slowing inflation in Tokyo and manufacturing output below forecasts, creating challenges for the central bank’s interest rate policy decisions. This information follows Prime Minister Sanae Takaichi’s nomination of two Bank of Japan board members who support her accommodative fiscal approach.
China’s central bank announced Friday it would eliminate foreign exchange risk reserves for certain forward contracts, a policy change designed to make dollar purchases less expensive.
The Chinese yuan achieved its strongest annual performance against the dollar since 2020 last year, breaking through the significant 7-per-dollar threshold, with this upward trend continuing into 2025.
In the United Kingdom, observers will closely monitor a special election that could increase pressure on Prime Minister Keir Starmer’s Labour Party, which has faced criticism over recent policy changes.
Polling indicates the contest in Gorton and Denton, located in Greater Manchester in northwestern England, remains highly competitive between Labour, Reform UK, and the Green Party.
Gold prices dipped 0.23% to $5,175.03 per ounce, while U.S. crude oil gained 0.09% to $65.27 per barrel.
Digital currencies also declined, with bitcoin falling 0.3% to $67,290.45 and ethereum dropping 0.68% to $2,016.78.
