Volkswacht Bodensee - Markets drop as valuations and US jobs, rates spook investors

Growing worries that valuations, particularly among tech companies, are far too high following this year's blockbuster rally added to the sense of unease on trading floors.

A rollercoaster week looked set to end on a negative note after a report by outplacement firm Challenger, Gray & Christmas showed layoff US announcements hit the highest level in 22 years last month.

The report found that this year has been the worst for layoffs since 2020, when the labour market was decimated by the pandemic.

Investors have been forced to use private data as a guide to the state of the world's biggest economy owing to the longest-running government shutdown that has closed numerous departments.

While the latest jobs figures came a day after news that private hiring had increased, it sparked fresh concerns about the labour market and put pressure on the Fed to cut borrowing costs for a third successive meeting in December.

However, comments from central bank officials suggested another reduction was not certain, echoing boss Jerome Powell's warning last week.

While stabilising the jobs market is one half of the Fed's dual mandate, some decision-makers said they were more concerned about the other: keeping a cap on inflation.

Fed Cleveland chief Beth Hammack said she remained "concerned about high inflation and believe policy should be leaning against it".

"To me, comparing the size and persistence of our mandate misses and the risks, inflation is the more pressing concern," she said Thursday in prepared remarks for an event in New York. She called the current setting "barely restrictive".

Chicago Fed boss Austan Goolsbee told CNBC he was concerned about making decisions during the shutdown without the full data, adding that such a move made him "even more uneasy.

And their St Louis counterpart said cutting rates would take away the downward pressure that was still needed on inflation.

All three main indexes on Wall Street ended down as tech firms, which have been at the forefront of the surge to record highs this year, took the brunt of the selling.

The Nasdaq shed 1.9 percent and S&P 500 more than one percent

Asia fared barely any better, with Tokyo and Seoul off more than two percent, having recently hit all-time highs.

Hong Kong, Shanghai, Sydney, Taipei and Manila were also down, though Singapore, Wellington and Jakarta rose.

Traders have in recent weeks been taking stock of this year's rally, which has sent several markets to all-time highs and valuations soaring -- chip giant Nvidia last week became the first $5 trillion company.

The gains have been fanned by a mind-boggling flood of investment into all things artificial intelligence as well as hopes for US rate cuts and an easing of trade tensions.

But there is growing talk -- even among some top CEOs -- that a bubble has formed and stocks could be in for a pullback or even a correction in which they lose about 10 percent from their recent peaks.

- Key figures at around 0230 GMT -

Tokyo - Nikkei 225: DOWN 2.2 percent at 49,783.49 (break)

Hong Kong - Hang Seng Index: DOWN 0.8 percent at 26,267.14

Shanghai - Composite: DOWN 0.2 percent at 4,000.85

Euro/dollar: DOWN at $1.1539 from $1.1548 on Thursday

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

West Texas Intermediate: UP 0.4 percent at $59.68 per barrel

Brent North Sea Crude: UP 0.4 percent at $63.61 per barrel

New York - Dow: DOWN 0.8 percent at 46,912.30 (close)

London - FTSE 100: DOWN 0.4 percent at 9,735.78 (close)

R.Braegger--VB