Gauges in Japan, South Korea and Australia all opened weaker, even as an index of the region was poised for its third gain in four weeks. The S&P 500 closed 1.7% lower while the Nasdaq 100 declined 2.1% Thursday. Attention was also on the pound Friday, which fell after the Financial Times said UK Chancellor Rachel Reeves was ditching a planned income tax rise. 

The dollar, gold and Treasuries all held their losses as investors parsed commentary from Fed officials that cast doubt over a December rate cut. Also, the October jobs report will be released without a reading of the unemployment rate.

The moves dealt a fresh blow to risk sentiment, highlighted by heavy selling in high-flying tech giants amid mounting valuation concerns. Beneath the surface, some investors pointed to a rotation into more defensive sectors. With optimism over the US government's reopening largely priced in, traders are now focusing on the upcoming wave of economic data, as the odds of a December Fed rate cut slip below 50%. "It's an expensive market and expensive markets need lower rates to help justify today's elevated valuations," said Matt Maley at Miller Tabak + Co. "So, the idea that this could change quickly with so much data coming out all at once, this uncertainty is raising some fear in the marketplace."

While President Donald Trump signed legislation to end the longest shutdown in US history, it may still take a while for the federal bureaucracy to fully restart. Even so, the October jobs report will skip the unemployment rate as the household survey wasn't conducted, US top economic adviser Kevin Hassett told Fox News' America's Newsroom. Some traders may be concerned that the omission of key data due to the shutdown may bolster arguments for officials to stand pat. Currently, traders are pricing in about even odds that the Fed will cut rates in December.

Chair Jerome Powell said last month that a reduction is "not a foregone conclusion," with the decision to be premised on incoming information.

In separate statements, Fed Bank of St. Louis President Alberto Musalem said officials should move cautiously on rates with inflation running above target, while Cleveland counterpart Beth Hammack noted policy should remain "somewhat restrictive." Minneapolis Fed President Neel Kashkari said he didn't support the last cut and is undecided about December.

Elsewhere, President Donald Trump is readying substantial tariff cuts designed to address high food prices and a series of new trade deals as he seeks to address voter concerns over the cost of goods.

In Asia, investors await data due Friday on China's home prices, retail sales and the jobless rate, following signs of sluggishness in the credit market. Bloomberg calculations based on data released by the People's Bank of China on Thursday showed China's credit expansion was the weakest in more than a year last month, dragged down by slower government bond sales and lackluster borrowing demand across the economy.

Source: Bloomberg