Asia to Join Global Equity Rally Before Jobs Data: Markets Wrap
Shares in Asia were poised for early gains Friday after stocks and bonds rallied on Wall Street as further signs of a cooling labor market reinforced bets the Federal Reserve will cut rates this month.
Equity index futures for Japan, Australia and Hong Kong all rose. The added 0.8% to a new peak while the rose 0.9% on Thursday. A measure of global stocks climbed for a second day. US futures edged higher in early Asian trading, helped along by post-market gains for as its chief executive said its AI outlook would improve “significantly.”
Treasuries rallied across the curve. The policy-sensitive US two-year yield fell three basis points to the lowest in around a year Thursday. Money markets almost fully priced in a Fed reduction this month and see at least two by year-end.
The action reflected the latest readings on hiring and unemployment claims on the eve of jobs data which is expected to extend the since the pandemic. Slowing demand, rising costs and President Donald Trump’s unpredictable trade policies have cooled hiring, adding pressure on the Fed to shore up the labor market.
“Many investors are clearly hoping for rate cuts, but it is important to remember to be careful what we wish for,” said Steve Sosnick at Interactive Brokers. “Data that show a gently decelerating, but not dire labor market would suit that goal. Plunging data might bias the Fed to further cuts, but could also raise concerns that the central bank is too far behind the curve.”
In Asia, data set for release includes inflation in Taiwan and the Philippines and retail sales in Singapore. Markets are closed in Indonesia and Malaysia.
Elsewhere, Trump signed an Thursday implementing his trade agreement with Japan, under which the US will impose a maximum 15% tariff on most of its products.
In China, financial regulators are considering a number of for the stock market as they grow concerned about the speed of recent gains.
Jobs Data
Traders are now positioning themselves for the key jobs reading. Consensus forecasts peg nonfarm payrolls having grown 75,000 in August, which would mark a fourth straight month of job growth below 100,000. The unemployment rate is seen rising to 4.3% — the highest level since 2021.
In the run-up to the data, figures showed US jobless claims rose to the highest since June. Private-sector payrolls increased by 54,000, according to ADP Research data, missing estimates. Hiring plans fell to the weakest level for any August on record, according to Challenger, Gray & Christmas.
“The Federal Reserve’s free pass on the labor market has ended,” said Jamie Cox at Harris Financial Group. “You can expect the Fed to tilt its balance of risks to cut rates in September.”
Read: US PREVIEW: August Job Gains May Improve, But Jobless Risks Loom
Lackluster employment figures released after the July meeting have prompted greater concern, and Fed Chair Jerome Powell recently signaled a rate cut could be warranted, citing a “shifting balance of risks.”
Fed Governor Christopher Waller said in a speech last week that the data support the view that “labor demand may be on the edge of a sharp decline,” a trend he argued monetary policy should address.
Waller has been one of the Fed governors favoring interest-rate cuts to guard against an outright deterioration in the job market. On Wednesday, he suggested the possibility of multiple reductions in borrowing costs by the end of the year.
In commodities, gold opened lower Friday after falling below its record high Thursday. Oil also lower Friday after two daily declines against the backdrop of concerns OPEC+ may bolster supply at a meeting on Sunday.
Some of the main moves in markets:
Stocks
Currencies
Cryptocurrencies
Commodities
This story was produced with the assistance of Bloomberg Automation.
