Asian stocks rose broadly on Friday morning after weaker-than-expected U.S. jobs data raised the possibility that the Federal Reserve might become less aggressive on its policy tightening stance in the coming months.
MSCI’s broadest index of Asia-Pacific stocks outside Japan rose 0.45%, benefiting from a strong close on Wall Street overnight. Japan’s Nikkei rose 0.96% and Seoul shares opened 0.77%, while Australia’s resource-rich index rose 0.81%.
Overnight, tech stocks led a rally on Wall Street, pushing the S&P500 up 1.84%, the Nasdaq Composite 2.68% and the Dow Jones Industrial Average 1.29%.
The ADP’s National Jobs Report on Thursday showed that the U.S. payroll rose at a slower pace than expected last month.
Investors are now looking to the U.S. Labor Department’s full jobs report, due later Friday, to confirm a slowdown in the jobs market, which could convince the Federal Reserve to slow interest rate hikes. interest for the rest of the year.
“For equities right now, anything that could be seen as capping Fed tightening could be seen as supportive,” said Rob Carnell, head of Asia research at ING.
“So, therefore, weak macro data turns positive for equities.”
Economists expect about 325,000 jobs to have been created last month in the United States and estimate that unemployment has fallen to 3.5%.
“Any deviation from these numbers that shows the labor market is holding up better than that could well be negative for equities and vice versa,” Carnell said.
Inflation is the main concern of the Fed and global policymakers. Fed officials said U.S. interest rates were likely to continue to be raised aggressively unless inflation moderated.
“Initial pressure to hike rates that had built the previous day on strong economic data immediately eased after a weaker than expected ADP jobs release in May, suggesting things are calming down,” he said. said Stephen Innes of SPI Asset Management.
Markets blocked back-to-back 50 basis point hikes from the Fed in June and July, but the dollar was pushed this week by uncertainty about what will happen after that.
The U.S. dollar index, which tracks the greenback against six major currencies, was down 0.039% at 101.71, halting a rally earlier in the week.
The yen was kept under pressure by ultra-low interest rates in Japan and last stabilized at 129.80 to the dollar, after losing 2% against the greenback this week.
US Treasury yields were mixed ahead of the nonfarm payrolls data.
The benchmark 10-year yield was at 2.9168% while the 2-year yield, which tends to be sensitive to US rate expectations, was down at 2.6438%.
Oil prices rose after crude inventories fell in the United States amid strong demand, even as OPEC+ oil-producing nations agreed to increase production. Brent crude futures rose 0.09% to $117.72 a barrel, while U.S. West Texas Intermediate crude stood at $116.94.