Asian Markets Cautious as US Jobs Data and Tariff Ruling Loom

GLOBAL MOOD: Mild Risk-Off
Drivers: Congressional restraint on US military action, Persisting geopolitical risk in Ukraine

 Markets struck a cautious, mildly risk-off tone as Asian equities edged higher after recent losses, but conviction remained thin. Investors rotated away from mega-cap tech amid valuation concerns, while awaiting US payrolls data and a Supreme Court ruling on tariffs. Mixed signals from labour data, geopolitical strains around Venezuela and Ukraine, and uncertainty over Fed easing kept risk appetite restrained despite support from bond purchases and resilient trade data.

TODAY’S WATCHLIST

• China Inflation Data
• US Unemployment Data
• US Supreme Court Tariff Ruling

THE BIG STORY
The US Senate on Thursday advanced a war powers resolution that would bar Donald Trump from taking further military action against Venezuela without Congressional authorisation, highlighting growing bipartisan unease over his unilateral use of force following the dramatic capture of former Venezuelan leader Nicolás Maduro late last year. The measure passed the procedural vote 52–47, with five Republicans joining all Democrats, and sets the stage for a full vote next week although it still faces hurdles in the House and a likely presidential veto.

The pushback in Washington underscores mounting scrutiny over the administration’s expanding military footprint in the region even as setbacks abroad continue to underscore geopolitical risk notably Russian drone attacks on Kyiv, which triggered fires and injuries early Friday, reminding markets that the nearly four-year conflict in Ukraine remains volatile and unresolved.

Data Spotlight
The US trade deficit narrowed sharply to $29.4 billion in October 2025, the smallest gap since June 2009, as imports fell 3.2% to a 21-month low while exports rose 2.6% to a record $302 billion. Tariffs drove pronounced shifts in trade flows, with exports boosted by strong gains in non-monetary gold and precious metals, while pharmaceutical imports dropped sharply. Services exports also improved modestly, led by travel, intellectual property and business services.

Labour market data remained mixed but stable. Initial jobless claims rose slightly to 208,000, still well below historical averages, while continuing claims increased to 1.91 million, reinforcing the picture of low layoffs but slow hiring momentum. Federal employee claims eased further, suggesting limited spillover from the government shutdown into broader labour conditions.

Inflation expectations ticked higher at the front end. Median one-year-ahead inflation expectations rose to 3.4% in December from 3.2%, while three- and five-year expectations stayed anchored at 3.0%. At the same time, inflation uncertainty increased across all horizons, pointing to growing dispersion in household views on future price pressures.

Takeaway: The US economy is showing resilience through strong exports and contained layoffs, even as hiring remains sluggish. Near-term inflation expectations are creeping higher, but stable long-term views give the Fed room to stay patient.

WHAT HAPPENED OVERNIGHT

• US stocks mixed as tech cools, defence rallies on budget push
  • US stocks closed mixed as losses in large-cap technology stocks offset gains in defence names following President Donald Trump’s call for a $1.5 trillion military budget.
  • Nvidia fell 2.2%, Broadcom dropped 3.2%, and Microsoft slipped 1.1%, dragging the S&P 500 technology index down 1.5% as investors reassessed stretched AI valuations.
  • Alphabet rose 1.1%, a day after overtaking Apple in market capitalisation for the first time since 2019, while Apple eased 0.5%.

• US Treasury yields climb as labour resilience tempers slowdown fears
  • The benchmark 10-year US Treasury yield rose 4.5 bps to 4.18%, extending gains as investors reassessed growth risks.
  • The 2s–10s yield curve steepened by 2 bps to 69 bps, reflecting firmer long-end yields.
  • December layoffs fell to 35,553, the lowest in 17 months, while planned hiring reached the strongest December level in years, easing fears of a sharp slowdown.
  • Weekly jobless claims rose less than expected, reinforcing the view of a still-resilient labour market and reducing urgency for aggressive Fed easing.

• US Dollar firms as labour resilience tempers Fed cut bet
  • The dollar index rose 0.2% to 98.9, its highest level since early December, gaining against the euro and Swiss franc.
  • Initial jobless claims edged up modestly, while job cuts fell in December, the lowest since July 2024, pointing to a still-resilient labour market.
  • The US trade deficit narrowed sharply to $29.4 billion in October, the smallest since June 2009, as imports hit a 21-month low and exports reached a record high.

• Crude oil prices rebounds sharply on supply risk concerns
  • Brent crude prices jumped over 3%, snapping a two-day losing streak and settling at a two-week high.
  • Ongoing uncertainty around Venezuelan crude flows continued to support prices.
  • Markets also priced in potential disruptions from Russia, Iraq and Iran, keeping supply-side worries elevated.
  • Brent rose 3.4% to $61.99 per barrel, while WTI gained 3.2% to $57.76 per barrel.

Day’s Ledger

Economic Data

• China Inflation Data
• India Bank Credit-Deposit Growth
• India FX Reserves
• US Unemployment Data

Corporate Actions

• Oct-Dec Earnings: Globus Spirits,IREDA, Tejas Networks,
• Suryo Foods board to consider rights issue
• TANFAC board to consider fund raising

Policy Events

• Fed Balance Sheet
• ECB Lane Speech
• Fed Kashkari Speech

Tickers to Watch

• Bajaj Finserv completes Allianz's stake buyout in its insurance arms
• Reliance Industries says it may buy Venezuelan oil, awaiting clarity
• Rate cuts impacts bank's margins up to 5-10 bps: PNB's Ashok Chandra
• Strong Q3 show, improved outlook positive for Godrej Consumer Products
• Granules India gets USFDA tentative nod for generic ADHD treatment tablets
• L&T bags order from Indian Army to upgrade Pinaka rocket launchers
• Hindustan Unilever gets ₹1,560-crore income tax order for FY22
• Morepen Labs gets stay on GST refunds show-cause notice from Himachal HC

Must Read

• Judiciary can't order GST cuts on air purifiers, Centre tells Delhi HC
• Easing US yields and a weaker rupee lift one-year returns
• Indian, German companies to sign submarine manufacturing deal this year
• Budget 2026-27: Health sector seeks tax sops, investment in preventive care
• RBI proposes 3-year break for co-op banks' directors after 10 yrs on board
• ASEAN-India trade pact under review to expand market access: Envoy
• BMI forecasts India fiscal deficit at 4.6% in FY27 despite 4.3% target