Asian equity markets fell sharply overnight, European bourses opened lower, and the dollar held near highs as traders awaited Fed speakers Waller and Williams.
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Global equity markets extended their decline Friday, with European stocks opening lower after a heavy selloff in Asia. The technology sector led the losses. Investors turned cautious ahead of speeches from two Federal Reserve policymakers later in the day.
Japan's Nikkei 225 fell 1.8%. South Korea's Kospi dropped 2.1%. Taiwan's Taiex slid 2.5%, with semiconductor stocks taking the worst of it. The weakness followed a session on Wall Street where the Nasdaq Composite lost more than 2%, its deepest single-day drop in three weeks.
European bourses opened in the red. The Stoxx 600 was down 0.6% in early trade. Technology and mining sectors underperformed. Germany's DAX lost 0.7%, France's CAC 40 fell 0.5%, and the UK's FTSE 100 slipped 0.3%.
The dollar held near its recent highs against a basket of major currencies. The euro traded at $1.0825, little changed from Thursday's close. Sterling was flat at $1.2680. The yen weakened past 158 per dollar, a level that has drawn attention from Japanese officials in recent weeks.
Treasury yields edged lower. The 10-year note yielded 4.48%, down 2 basis points from Thursday. The 2-year yield fell to 4.92%. Lower yields typically support growth stocks, though the move did little to stem the tech selloff.
Fed speakers scheduled for Friday include Governor Christopher Waller and New York Fed President John Williams. Waller is set to speak at 10 a.m. ET on the economic outlook. Williams will speak at 2 p.m. ET. Both are expected to address inflation and the rate path.
Recent data showed the Fed's preferred inflation gauge, the core PCE price index, rose 2.8% in April, above the 2% target. That has pushed back expectations for rate cuts. Markets now price a 60% chance of a first cut in September, down from 70% a month ago.
Traders will watch the Fed speeches for any shift in tone. The tech selloff has been concentrated in mega-cap names, which have driven much of the equity rally this year. A further rotation out of growth stocks could pressure the dollar and support safe-haven currencies like the yen and Swiss franc. For now, the dollar's strength remains intact, with the euro and sterling stuck in narrow ranges.
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