The Hang Seng China Enterprises Index fell as much as 2.5%, while the Hang Seng Index dropped as much as 2.2%. Trading has been volatile in recent days as China attempted to stem the country’s equity market slump — and both gauges are currently higher for the week thanks to a big gain on Tuesday amid optimism around state support. Prior efforts to arrest market declines, notably in 2015, may not work this time around, investors warn. 

Markets will close early on Friday in Hong Kong and Singapore, and are shut in mainland China, Taiwan, South Korea, Indonesia, the Philippines and Vietnam.

“People are taking a break before Chinese New Year after the recent small rebound,” says Willer Chen, an analyst at Forsyth Barr Asia. “Also turnover is a bit light today without southbound support, thus we are seeing some downside.”

US futures were little changed. The S&P 500 closed 0.1% higher on Thursday, just below 5,000 — a threshold it hit briefly during the session. The closing level set a fresh high. The Nasdaq 100 rose 0.2%.

“Our base case remains for a soft landing for the US economy, with the S&P 500 ending the year around current levels,” Solita Marcelli at UBS Global Wealth Management said in a note on Thursday. “However, recent economic data have highlighted the potential for a period of continued stronger growth, tame inflation, and swifter monetary easing. In this event, we believe the S&P 500 has the potential to rise to around 5,300 this year.”

Meanwhile, back in Asia, China’s efforts to arrest a $7-trillion stock market rout are evoking memories from 2015, when Beijing took drastic steps to stem a crash. But, this time, investors say, the problems are much more entrenched.

“What we need in China in terms of catalysts is a large coordinated fiscal easing targeting demand,” Florian Neto, head of Asia multi-asset at Amundi Hong Kong Ltd., said on Bloomberg Television. “What we have is market stabilization, but it’s not tackling the fundamental issues in the Chinese economy.”

Australian equities were little changed and Japanese stocks traded within tight ranges, with the weaker yen offering some support. The currency steadied after slipping 0.8% against the greenback on Thursday, in the wake of comments from a Bank of Japan deputy governor suggesting the central bank will be in no rush to shift its easy policy settings. 

Japan-listed SoftBank Group rallied as much as 10% after exceeding net income forecasts in its latest quarterly results and from further gains for Arm Holdings Plc, in which it owns a stake. Nissan shares slipped more than 9% after the company missed profit estimates.

Treasuries were little changed in Asian trading after a decline on Thursday. Selling came even after the US government sold $25-billion in 30-year bonds at a lower-than-expected yield, in a sign of healthy demand. The 10-year yield rose three basis points Thursday and has added 13 basis points this week as investors adjust interest rate forecasts on strong economic data and comments from central bank policymakers.

Federal Reserve Bank of Richmond President Thomas Barkin was the latest to reiterate the central bank has time to be patient before cutting rates. Fresh data on Thursday also underscored US economic resilience. Jobless claims fell just shy of consensus predictions, in a sign the labor market remains strong.

Elsewhere, New Zealand yields and the currency climbed after ANZ Bank New Zealand Ltd. forecast that the central bank will raise interest rates twice more this year.

Inflation revisions

Interest rate forecasts could receive another jolt later on Friday when the US revises monthly inflation data. Investors will be watching closely after last year’s updates cast doubt on the Fed’s progress in taming consumer prices.

“CPI revisions could throw cold water on the recent good inflation numbers — but this is a wonky number,” said Andrew Brenner at NatAlliance Securities. “We think the next move comes off the CPI number next Tuesday.”

Elsewhere, Treasury Secretary Janet Yellen said US regulators are monitoring risks stemming from nonbank mortgage lenders, and cautioned that a failure of one of them is possible in the case of market strains.

Bitcoin topped $45,000. Oil rallied amid doubts over a potential cease-fire in the Israel-Hamas war.