The tone in global stocks has weakened as Asian shares track overnight losses on Wall Street – even as bond yields slide amid a revival in bets that the Federal Reserve will cut interest rates in June.

Japanese equities were stand-out underperformers, with the Nikkei on course for its worst week in three months, buckling under the weight of a resurgent yen amid rising bets for a Bank of Japan rate hike next week.

Chinese stocks drew some support after official figures showed the economy expanded 5.4 per cent in the fourth-quarter year-on-year – much stronger than expected and putting full-year 2024 growth at 5.0 per cent, bang in the centre of Beijing’s target.

Mainland Chinese blue chips were up 0.3 per cent as of 0207 GMT, while Hong Kong’s Hang Seng added 0.14 per cent.

China’s yuan strengthened slightly to 7.34 per dollar in offshore trading.

Japan’s Nikkei slumped 1.1 per cent.

MSCI’s world index edged down 0.05 per cent. Its broadest index of Asia-Pacific shares lost 0.4 per cent.

Meanwhile, US S&P 500 futures pointed 0.1 per cent higher after the cash index closed down 0.2 per cent overnight.

Those small declines came after a 1.8 per cent jump on Wednesday – the biggest daily per centage gain since the post-election rally on November 6 – fuelled by strong bank earnings at the start of the new reporting season.

The end of the week is likely to be a cautious one though, ahead of Donald Trump’s inauguration as US President on Monday, which is also a market holiday for Martin Luther King Jr Day.

“Investors are enjoying the re-anchoring of the market narrative to company fundamentals and away from the macro, with earnings season so far proving robust,” said Kyle Rodda, senior financial market analyst at Capital.com.

At the same time, declines in the dollar and bond yields come as “fears of sticky or re-accelerating inflation and a prolonged pause or an end to the Fed’s cutting cycle eased”, he said.

Ten-year US Treasury yields stood at 4.6125 per cent in the latest session, after sliding to the lowest since January 6 at 4.5880 per cent on Thursday, when Fed Governor Christopher Waller said three or four interest cuts this year were still possible if US economic data weakened.

Traders now see the Fed’s June meeting as a likely time for another quarter-point rate reduction.

Ten-year Japanese government bond yields eased along with overnight moves in Treasuries, even as comments from BOJ Governor Kazuo Ueda and one of his deputies, Ryozo Himino, this week spurred a rise in bets for a quarter-point hike on January 24 to 79 per cent.

The yen pushed to a fresh one-month high of 154.98 per dollar on Friday, with the US currency also sagging on the prospect of earlier Fed cuts.

The dollar index – which measures the greenback against a basket of six major currencies, including the yen – edged down 0.06 per cent to 108.90.

The euro was little changed at $US1.0308 ($A1.6591), while the beleaguered sterling was flat at $US1.2237 ($A1.9696).

Declines in bond yields supported alternative assets.

Bitcoin edged as high as $US101,769.43 ($A163,800.99) for the first time since January 7.

Gold stood at $US2,714 ($A4,368), hovering close to Thursday’s high of $US2,724.55 ($A4,385.25), its strongest level in more than a month.

Fed rate cut speculation also buoyed crude oil.

Brent crude futures rose 13 cents, or 0.2 per cent, to $US81.42 ($A131.05) per barrel, after declining 0.9 per cent in the previous session.

US West Texas Intermediate crude futures CLc1 were up 27 cents, or 0.3 per cent, to $US78.95 ($A127.07) a barrel, following a 1.7 per cent drop.

This post was originally published on Michael West.