Global Markets Fall on High Valuations and US Jobs Concerns

Asian stocks followed Wall Street lower on Friday as investors digested weak US jobs data alongside signals from the Federal Reserve suggesting no further interest rate cuts this year.

Concerns over high market valuations, particularly among technology companies, compounded the unease. This year’s blockbuster rally has pushed several indices and individual shares to record levels, prompting fears of a potential correction.

The market turbulence followed a report from outplacement firm Challenger, Gray & Christmas, which showed that US layoff announcements reached their highest level in 22 years last month. The data revealed that 2025 has been the worst year for job cuts since 2020, when the labour market was severely disrupted by the pandemic.

Investors have relied heavily on private sector data to gauge the state of the US economy due to the longest-running government shutdown, which has closed numerous departments and limited official statistics.

While the latest jobs figures came just a day after reports of an increase in private hiring, the numbers rekindled worries about the labour market and intensified speculation over whether the Fed would implement a third consecutive rate cut at its December meeting.

However, central bank officials have tempered expectations, echoing Fed Chair Jerome Powell’s warning last week that another reduction is not guaranteed.

While stabilising employment is a key part of the Fed’s dual mandate, some policymakers emphasised that controlling inflation remains the primary concern.

Beth Hammack, head of the Federal Reserve Bank of Cleveland, stated she remained “concerned about high inflation and believe policy should be leaning against it.” She described the current monetary setting as “barely restrictive” and argued that inflation presented a more pressing risk than employment.

Austan Goolsbee, president of the Chicago Fed, expressed unease about making policy decisions without full data during the government shutdown, while the St Louis Fed warned that rate cuts could undermine efforts to maintain downward pressure on inflation.

On Wall Street, the three major indexes ended lower, with technology firms — which have been the drivers of this year’s gains — taking the brunt of selling. The Nasdaq fell 1.9 per cent, while the S&P 500 dropped over 1 per cent.

Asian markets were also weaker. Tokyo and Seoul slipped more than 2 per cent after recent all-time highs, while Hong Kong, Shanghai, Sydney, Taipei and Manila fell. By contrast, Singapore, Wellington, and Jakarta recorded modest gains.

Investors have been assessing this year’s rally, which has propelled several markets to historic peaks. Chipmaker Nvidia last week became the first $5 trillion company, bolstered by surging investment in artificial intelligence and optimism over US rate cuts and easing trade tensions.

Yet concerns of a bubble are growing. Some top executives warn that stocks could face a pullback or correction, potentially shedding around 10 per cent from recent highs.

Key Market Figures (around 02:30 GMT)

Asia:

• Tokyo Nikkei 225: DOWN 2.2% at 49,783.49
• Hong Kong Hang Seng: DOWN 0.8% at 26,267.14
• Shanghai Composite: DOWN 0.2% at 4,000.85

Currency:

• Euro/Dollar: DOWN at $1.1539 (from $1.1548)
• Pound/Dollar: DOWN at $1.3130 (from $1.3135)
• Dollar/Yen: UP at 153.27 yen (from 153.04 yen)
• Euro/Pound: DOWN at 87.89 pence (from 87.91 pence)

Commodities:

• West Texas Intermediate: UP 0.4% at $59.68 per barrel
• Brent North Sea Crude: UP 0.4% at $63.61 per barrel

US & UK Markets:

• Dow Jones: DOWN 0.8% at 46,912.30
• FTSE 100: DOWN 0.4% at 9,735.78

Investors continue to navigate the tension between soaring valuations, inflation concerns, and labour market uncertainty, leaving global markets on edge as the year nears its close.