GLOBAL MARKETS: Asian shares step back from record as tech jitters return, bonds rally

Asian shares retreated from record highs on Friday as worries about shrinking margins in the tech sector hit the likes of Apple, driving investors into safe-haven bonds ahead of key U.S. inflation data.

On Wall Street, the technology-heavy Nasdaq Composite .IXIC tumbled 2% after Cisco Systems CSCO.O posted quarterly adjusted gross margin below estimates as costs of memory chips surged. That drove its shares down 12% and wiped out about $40 billion of its market cap.

The selloff spilled over into tech giants like Apple AAPL.O, which tumbled 5% in the biggest daily drop since April last year when U.S. President Donald Trump's sweeping "Liberation Day" tariffs spooked markets. Transportation companies also got caught up in worries about AI disruption.

"The prevailing tone in markets is a rotation toward more defensive areas of the equity market and companies with steady, less cyclical and more predictable earnings," said Chris Weston, head of research at Pepperstone.

"It is clear that investors are viewing developments in AI and AGI through a new lens, attempting to price a future that feels more uncertain and structurally disruptive than before."

On Friday, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 1.1%, trimming this week's gain to 3.7%. Japan's Nikkei .N225 skidded 1.3%, but was still up almost 5% for the week.

Chinese blue chips .CSI300 dropped 0.9% while Hong Kong's Hang Seng index .HSI slid 2.1%.

Both Nasdaq futures NQc1 and S&P 500 ESc1 eased 0.2%, while EURO STOXX 50 futures STXEc1edged up 0.1%.

The Financial Times reported on Friday that Trump is planning to scale back some tariffs on steel and aluminium goods, citing people familiar with the matter.

TRADERS AWAIT US INFLATION TEST

The broad selloff in stocks pushed buyers towards U.S. Treasuries, with the yield on the benchmark 10-year note US10YT=TWEB tumbling 7 basis points overnight, its biggest drop since October 10. It was steady in early Friday trade at 4.1134%.

A very strong auction of the 30-year bonds helped drive longer-term yields lower. 30-year yields US30YT=TWEB slumped 8.5 basis points overnight to 4.728%, its lowest since December 3.

Fed funds futures also rallied to reverse most of the losses after the payrolls data that led markets to pare back the chance of a rate cut in June. A move in June is now back in play, with the chance priced at 70%, and a total easing of 60 basis points is expected this year. 0#USDIRPR

Much attention will be on the U.S. inflation data due later in the day. Forecasts are centred on a monthly rise of 0.3% in the core measure, which would be enough to see the annual rate slow to 2.5% from 2.7% previously.

"Even an in-line result would reflect a meaningful deceleration from December and that could bolster animal spirits and spark energy back into the cyclical trade," said Jose Torres, a senior economist at Interactive Brokers.

In currency markets, the risk-sensitive Australian and New Zealand dollars took a step back. The Aussie AUD=slipped 0.2% to $0.7071, having lost 0.5% overnight, while the kiwi NZD=eased 0.1% at $0.6029, after slipping 0.3% overnight.

Precious metals attempted to recover from heavy losses. Gold XAU= rose 1.3% to $4,984 an ounce, after losing over 3% on Thursday, while silver XAG= climbed 2.5% to $77.0 an ounce, having plunged 10% overnight.

Oil prices extended declines after a sharp 3% slide overnight. AP reported that a U.S. aircraft carrier is being sent from the Caribbean to the Middle East as tensions with Iran escalate. O/R

U.S. West Texas Intermediate crude CLc1slipped 0.3% to $62.66 per barrel, while Brent crude futures LCOc1fell 0.2% to $67.37.

-Stella Qiu/Reuters