Asian shares sink as US jobs fail to clear rate outlook, tech hammered

Asian shares extended a global rout on Friday as the much anticipated US jobs data failed to provide clarity on interest rates, with investors returning to dumping riskier assets even after Nvidia's earnings dazzled.

Japan's Nikkei tumbled 2 per cent on Friday, Australia's resources-heavy shares slid 1.4 per cent, while South Korea plunged almost 4 per cent.

Wall Street dived overnight as jitters over inflated tech stock prices returned after temporary relief from Nvidia's stellar forecasts, resulting in the Nasdaq's widest one-day swing since April 9 when President Donald Trump's "Liberation Day" tariffs spooked markets.

Data showed the US economy added more jobs than expected in September, but a rise in the unemployment rate and downward revisions to prior months painted an ambiguous picture for the Federal Reserve as it considers whether a cut in interest rates is needed next month to bolster the labor market.

Treasury yields fell as futures moved to imply a 40 per cent probability of a US rate cut in December, up from 30 per cent a day earlier, but still not enough to convince investors of a December move, with the next payrolls numbers available only after the Fed meeting.

"The markets had plenty to be positive about and initially Nvidia's banging quarterly results meant Wall Street burst out of the gates. The US jobs data was probably as good as you could have hoped for too," said Kyle Rodda, a senior analyst at Capital.com.

"However, the momentum simply was not there to carry the rally through, with the passing of two critical risk events - both with positive outcomes, no less - not enough to kill the bearishness gripping the markets currently."

There are now more concerns about financial market stability among Fed officials, including the potential for a sharp drop in asset prices, as they debate when and even whether to cut interest rates further.

Cleveland Fed President Beth Hammack warned on Thursday that cutting rates further right now carries a wide range of risks for the economy. Fed Governor Lisa Cook sees a risk of outsized asset price declines.

In the currency markets, the dollar jumped on the risk-sensitive commodity currencies, hitting a three-month high on the Aussie and a fresh seven-month top on the kiwi.

It was steady at 157.50 yen, after scaling a new 10-month peak of 157.9 overnight, as traders stayed on high alert for intervention from Japanese authorities given the yen's recent rapid fall.

Data showed Japan's core consumer prices rose 3 per cent in October, keeping alive expectations of a near-term interest rate hike. However, prospects of economic stimulus from Japan's new government, led by Prime Minister Sanae Takaichi, have undermined the yen.

The government is set to unveil an economic stimulus package worth over 20 trillion yen, the biggest since COVID-19, on Friday.

Treasuries rose overnight as investors raised bets for a Fed cut next month. Two-year Treasury yields slipped 1 basis point to 3.545 per cent, having fallen 4 basis points overnight, while the 10-year yield was steady at 4.092 per cent, after easing 3 bps overnight.

Oil prices fell in early trade. US West Texas Intermediate crude dropped 0.9 per cent to $58.47, and was down 2.7 per cent this week.

Spot gold prices were flat at $4,077 per ounce, having been little moved overnight.