: Asian equities were set to climb early Friday even as traders scaled back expectations for a Federal Reserve rate cut next month which weighed on US stocks and strengthened the dollar.

Japanese, Australian and Hong Kong equity futures all rose. Contracts for Tokyo benchmarks were supported by further weakness in the yen as an index of greenback strength advanced for a fifth day on Thursday.

The action was driven by further signs of resilience in the US economy and comments from Fed Chair Jerome Powell that the central bank will be in no rush to cut interest rates. Powell’s comments appear in line with some of his other colleagues who are advocating a go-slow approach to future rate reductions.

US two-year yields, which are more sensitive to monetary policy, spiked after the remarks and traders dialed back bets on a December rate reduction to below 60% — from 80% in the previous day.

“Powell’s speech was hawkish,” said Neil Dutta at Renaissance Macro Research. “I think they will still cut in December since policy remains restrictive and they want to get to a neutral setting. That said, on the economy, I think Powell (and the broader consensus) is complacent. There is more downside risk in the near-term than is being appreciated.”

In Asia, the yen weakened past 156 per dollar Thursday, rekindling speculation over the potential for officials to step into support the currency. Emerging market currencies extended losses.

Investors will also be looking for any market reaction to Chinese retail and industrial production data due Friday in the wake of stimulus measures announced by Beijing in the past few weeks. 

Elsewhere, data set for release in the region includes gross-domestic product for Japan, Malaysia and Hong Kong, while trade numbers in Indonesia are expected. Markets are closed in India.

In commodities, copper headed for a seventh consecutive weekly fall, partly driven by concerns over demand from China. Oil climbed and gold fell Thursday.

Data earlier Thursday in the US showed producer prices exceeded consensus forecasts. Jobless claims were below expectations and touched the lowest level since May. Short-dated US government debt sold off, pushing the policy-sensitive two-year yield six basis points higher Thursday, largely reserving its move from the prior day.

Several policymakers have urged a cautious approach to further rate cuts in comments this week, in light of a strong economy, lingering inflation concerns and broad uncertainty. Their comments come at a time when the equity market is showing signs of fatigue following a post-election surge that spurred calls for a pause, with several measures highlighting “stretched” trader optimism.

In the US, the S&P 500 dropped 0.6%, while the Nasdaq 100 slipped 0.7%. Automakers like Tesla Inc. and Rivian Automotive Inc. slumped as Reuters reported President-elect Donald Trump plans to eliminate the $7,500 consumer tax credit for electric-vehicle purchases. Walt Disney Co. jumped on a profit beat. 

  - Bloomberg