EQUITIES

Shares in Asia-Pacific largely declined in Friday trade, as investors reacted to overnight remarks from U.S. Fed Chairman Jerome Powell.

The Nikkei 225 in Japan led losses among the region’s major markets, declining 1.85%. Hong Kong’s Hang Seng index pared some losses after falling earlier more than 2%. It was last traded 0.55% lower. Mainland Chinese stocks also declined, with the Shanghai composite was down 0.07%.

Elsewhere, South Korea’s KOSPI traded 1.03% lower, and Australia’s S&P/ASX 200 dipped 1.53%. Singapore’s FTSE Straits Times index hovers above the flatline.

Overnight on Wall Street, the Dow Jones Industrial Average ended down 1.05%, to 34,792.76, while the S&P 500 lost 1.48% to 4,393.66, and the tech-heavy Nasdaq Composite dropped 2.07%, to 13,174.65.

OIL

Oil prices wobbled on Friday, burdened by the prospect of rate hikes, weaker global growth and COVID-19 lockdowns in China hurting demand, even as the EU weighed a ban on Russian oil.

Brent crude futures slid 1.53%, to $107.16 a barrel, while U.S. WTI crude futures declined 1.33%, to $102.68 a barrel.

Both benchmark contracts are heading for a drop of nearly 4% for the week.

Concerns about the Ukraine conflict stoking inflation and denting economic growth dominated trading in the second half of the week, with the IMF slashing its global growth forecast by nearly a full percentage point. Adding to negative sentiment for oil, comments from U.S. Federal Reserve Chairman Jerome Powell on Thursday pointing to aggressive rate increases drove up the dollar, which makes oil more expensive for buyers holding other currencies.

But all of that comes in a tight market, which could face even shorter supply if the European Union goes ahead with a ban on Russian oil.

CURRENCIES

Benchmark US 10-year Treasury yields extended gains on the back of Powell’s comments who took a hawkish tone on tightening policy, cementing the view that the U.S. central bank will hike interest rates aggressively as it fights soaring inflation. 

US Treasuries continued to be sold off on Friday, with the yield on five-year Treasury notes rising to 3.04%, the highest late 2018. The yield on 10-year Treasury notes was at 2.960%, up from the previous close of 2.9076 and not too far off from 2.9810% — a 40-month high marked on Wednesday. Yields on the two-year US Treasury, the most sensitive to interest changes, hit their highest in three years before coming off slightly.

Markets also reeling comments by ECB officials that the central bank might start hiking euro zone rates as early as July. German two-year yields hit an eight-year high overnight.

The U.S. dollar index, which tracks the greenback against a basket of its peers, held above 100 at 100.558.

GOLD

Gold prices were slightly higher on Friday, but on course for its first weekly loss in three, pressured by the strength in U.S. Treasury yields and the dollar.

Spot gold was flat at $1,952.70 per ounce, and U.S. gold futures were up 0.31% at $1,954.30.

Gold is down about 1.3% so far this week. Prices rose to near the key mark of $2,000 per ounce on Monday on safe-haven demand and mounting worries over inflation but have since pulled back to hit a two-week low in the previous session.

Spot silver fell 0.6% to $24.50 per ounce, and platinum eased 0.2% to $966.56, with both poised for weekly dips. Palladium rose 0.4% to $2,431.69.

ECONOMIC OUTLOOK

Asian shares tumbled on Friday, as investors reacted to U.S. Fed officials offering further sign of aggressive interest rate hikes outlook this year, as well as the fallout for the global economy from lockdowns in China.

The prolonged lockdown in Shanghai and its impact on the world's second-largest economy have weighed on local stocks and the Chinese currency. The lockdowns in China are likely to reinforce upside inflation pressures in coming weeks and months.

Overnight, U.S. Federal Reserve Chairman Jerome Powell said a half-point interest rate increase will be "on the table" when the Fed meets on May 3-4, adding it would be appropriate to "be moving a little more quickly".

His remarks effectively confirm market expectations of at least another half-percentage-point rate hike from the Fed next month and pointed to more aggressive set of Fed actions ahead. U.S. Treasuries continued to be sold off on Friday, and bond yields breached fresh multi-year peaks.

Powell's comments overshadowed robust U.S. corporate earnings and jobless claims data that showed the number of Americans filing new claims for unemployment benefits dropped last week, suggesting that April was another month of strong job growth.

High-growth stocks fell Friday as investors fretted about how the higher rate environment would impact their future growth potential.