Asian Stocks Rise as Traders Await US Payrolls: Markets Wrap

(Bloomberg) — Asian stocks rose in early trading as markets await a key US jobs reading that’s likely to guide the Federal Reserve’s policy outlook.

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The MSCI Asia Pacific Index rose 0.2%, lifted by a strong gain in South Korea, while shares in Australia rose and those in Japan and China traded in a tight range. Futures contracts for US stocks were steady after the S&P 500 closed little changed as traders refrained from big bets ahead of US nonfarm payrolls data. The dollar was little changed, while US Treasury yields edged higher.

Traders have escalated rate-cut bets in the past week, emboldened by the slew of softer-than-forecast US data, the Bank of Canada’s decision to ease monetary policy, and bets the ECB would be the next to cut — a move confirmed on Thursday. Global stocks are on track for their first weekly gain in almost a month, while a Bloomberg gauge of global government bonds posted its longest rising streak since November on Thursday.

“A quiet session should be expected ahead today given the large move lower in yields this week,” said Martin Whetton, head of markets strategy at Westpac Banking Corp. in Sydney. “The nonfarm payrolls data is on the horizon and it’s unlikely, given moves seen, that fresh risk appetite would appear.”

In Asia, markets will be paying close attention to Chinese trade data later Friday as fears of overcapacity in the nation’s manufacturing sector may cause trade partners to slap tariffs on its exports. Reserve Bank of Australia Deputy Governor Andrew Hauser is also due to speak after the nation’s growth almost stalled in the first quarter.

Investors will be also be monitoring the Indian rupee as the nation’s central bank meets to decide interest rates, with economists seeing borrowing rates unchanged.

The RBI can’t ignore the market’s negative reaction after Prime Minister Narendra Modi’s narrow election victory, but it’s unlikely to cut its rate on Friday, Bloomberg Economics’ Abhishek Gupta wrote in a note. “Cutting rates now – ahead of any reductions by the Federal Reserve — risks triggering capital outflows, which the RBI wants to avoid.”

Elsewhere in Asia, more than a half of surveyed Bank of Japan watchers have forecast that the central bank will trim its government bond buying when authorities meet next week, with a growing number also looking ahead to a rate hike in July.

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Attention will then turn to the looming US jobs print, which is expected to show the US added 180,000 jobs in May while the unemployment rate held steady. In the run-up to the reading, US data included jobless claims that topped estimates and labor costs which increased by less than previously reported. Swap markets continued to pencil in the start of the Fed rating cut in November, with a strong likelihood it begins in September.

“We expect the overall message from the non-farm payrolls report to be one of strength, albeit ebbing,” said Joseph Capurso, head of international economics at Commonwealth Bank of Australia in Sydney. “Consequently, market pricing for the FOMC’s first rate cut in September may be pushed out, supporting a modest increase in the US dollar.”

Oil rose Friday, set for a third straight gain, as expectations waned that OPEC and its allies will allow the market to become oversupplied. Gold slipped.

Key events this week:

• China trade, forex reserves, Friday

• Eurozone GDP, Friday

• US unemployment rate, nonfarm payrolls, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 10:34 a.m. Tokyo time

• Nikkei 225 futures (OSE) fell 0.2%

• Japan’s Topix was little changed

• Australia’s S&P/ASX 200 rose 0.2%

• Hong Kong’s Hang Seng rose 0.2%

• The Shanghai Composite rose 0.2%

• Euro Stoxx 50 futures were little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0889

• The Japanese yen was little changed at 155.74 per dollar

• The offshore yuan was little changed at 7.2588 per dollar

Cryptocurrencies

• Bitcoin was little changed at $70,700.87

• Ether was little changed at $3,799.71

Bonds

Commodities

• West Texas Intermediate crude rose 0.1% to $75.65 a barrel

• Spot gold fell 0.1% to $2,372.50 an ounce

This story was produced with the assistance of Bloomberg Automation.

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