(Bloomberg) — A recovery of global shares continued in Asia, tracking gains on Wall Street after signs of resilience in the US labor market eased concerns over a recession.
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Stocks rose from Japan to South Korea and Australia. While Hong Kong equities maintained their gains, those in mainland China lost momentum as perceptions grew that a better-than-expected inflation print mainly resulted from seasonal factors like weather. Markets are closed in Singapore.
US stock futures gained in Asia, following a rally on Wall Street Thursday. The S&P 500 had its best day since November 2022, while the Nasdaq advanced 3.1%.
The dollar slid, with a gauge tracking emerging-market currencies rising to its highest level since April 2022. Treasury yields edged lower in Asia after a three-day increase.
Risk appetite improved after a better US jobless claims report alleviated fears of a recession triggered by last week’s worse-than-expected employment data. The focus will now shift toward a fresh slew of US economic indicators due next week, including consumer prices.
“The storm clouds have parted” for the time being for Asian markets, said Tony Sycamore, market analyst at IG Australia. “I think we drift higher now until we see another growth scare but Japan might be off the investor radar for a bit.”
It remains to be seen how long the latest rebound can last as investors continue to digest different signals from policymakers. For one, Federal Reserve Bank of Kansas City President Jeffrey Schmid indicated he’s not ready to support a reduction in interest rates with inflation above the target, according to comments made on Thursday in the US.
Swap traders further trimmed bets on aggressive Fed easing in 2024. The global repricing has been so sharp that at one point interest-rate swaps implied a 60% chance of an emergency rate cut by the Fed in the coming week — well before its next scheduled meeting in September. Current pricing suggests about 40 basis points of cuts for September.
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