Asian equity markets might face challenges as trading in the United States late Thursday witnessed a significant downturn, with investors gravitating towards traditional safe-havens amidst escalating uncertainty concerning Iran’s potential reaction to geopolitical strains. This movement resulted in a surge in demand for commodities like oil and gold, along with U.S. Treasuries, the U.S. dollar, Swiss franc, and Japanese yen, despite the absence of a direct news event sparking this shift. Market commentators have highlighted various indicators of market apprehension, such as increased security protocols at embassies and unsubstantiated claims of the CIA forewarning about a possible imminent threat to Israel. Interestingly, the defence sector emerged relatively unscathed, even thriving, amid the wider market slump. Keeping abreast of developments in the Israel-Iran dynamics, as well as movements in defensive and safe-haven assets such as the Japanese yen, U.S. bonds, gold, and the Swiss franc, is advisable as the weekend approaches.
On a broader scale, attention is gradually turning towards the impending U.S. employment report set to be released on Friday. While the payroll data is eagerly waited for its comprehensive scope and perceived reliability, adjustments stemming from a less robust household survey might influence this month’s figures. The anticipated deceleration in March’s payroll expansion is consistent with a series of mixed signals from the labour market. The recent US JOLTs data, which matched expectations, underscores a labour market that remains vigorous. It’s important to note that an escalation in Middle Eastern geopolitical tensions could lead to a constrained and volatile response to the U.S. NFP data. Additionally, Chinese financial markets will be closed on Friday due to a national holiday.
