The measure for equities in the region rose for a fifth consecutive session as Japan’s Topix hit a record intraday high and South Korea and Australian shares advanced. The S&P rose 0.5% and the Nasdaq rose 0.9% to hit new highs on Wednesday in the short session ahead of the US holiday. Contracts for US equities were flat in early Asian trading.
The move was helped by data showing the services sector contracted at the fastest pace in four years while the labor market showed further signs of softening.
In Asia, the yen strengthened on Thursday after hitting a fresh 1986 low against the greenback in the previous session as speculation continued that the Bank of Japan would gradually tighten policy.
Minutes from the Fed’s June policy meeting showed officials were waiting for evidence that inflation was cooling and were split on how long to keep rates elevated. Swap traders had forecast about two rate cuts in 2024, with the first in November – although bets on a September cut rose.
Fawad Razakzada at CitiIndex and Forex.com said, “Bad news is good news. “Risk assets reacted as a result of today’s US data release.”
Australian and New Zealand yields fell early Thursday after the Treasury 10-year yield fell seven basis points to 4.36%, weighing on an index of dollar strength.
Elsewhere in Asia, Chinese electric-car brands maintained their share of the European EV market in May. BYD Co. Such automakers accounted for 8.7% of total EV sales, up from about a year ago, as Chinese companies pressure European counterparts with new, cheaper models.
Meanwhile, Britons are set to vote in a general election on Thursday. The pound was little changed in early Asian trading.
Job report
Investors will now be keeping a close eye on Friday’s US jobs report. Economists expect a gain of 190,000 in June nonfarm payrolls — down from the previous month — with the unemployment rate at 4%.
“Given other evidence of a cooling economic backdrop, the payrolls report could be increasingly critical for the Fed as it looks for rationales to signal rate easing,” said Quincy Crosby at LPL Financial.
Chicago Fed President Austin Goolsby said there is still a lot of data that needs to be seen before the US central bank has confidence to cut interest rates.
“Fundamental support for the US economy remains until employment weakens significantly, although there is some evidence of slowing,” said Don Rissmiller at Strategas. “Fed members have signaled they want to see more progress on inflation – fortunately the US economy still looks strong enough to take an extended rate break. But the clock is ticking.”
Gold was flat after Wednesday’s gains in commodities. Crude oil was held near a two-month high after a government report showed US crude inventories fell by the most in nearly a year.
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