Asian shares posted 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.
Stocks rose in Japan, Australia and South Korea at the open. The Nikkei-225 index rose by more than 1% after President Donald Trump signed an executive order implementing his trade agreement with Japan. The S&P 500 added 0.8% to reach a new peak while the Nasdaq 100 rose 0.9%.
Treasuries extended a Thursday rally that saw the policy-sensitive US two-year yield fall three basis points to the lowest in around a year. Money markets are now almost fully pricing 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 before Friday’s jobs data, which is expected to extend the weakest stretch of US job growth since the pandemic. Slowing demand, rising costs and 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.”
Elsewhere, Trump signed an executive order Thursday implementing his trade agreement with Japan, under which the US will impose a maximum 15% tariff on most of its products.
China’s stock markets will once again be in focus after shares fell more than 2% Thursday. The country’s financial regulators are considering a number of cooling measures for the stock market as they grow concerned about the speed of recent gains.
Meanwhile, 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.”
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 most vocal 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.
Gold edged higher Friday, while oil extended losses into a third session against the backdrop of concerns OPEC+ may bolster supply at a meeting on Sunday.
Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.1% as of 9:22 a.m. Tokyo time
Hang Seng futures rose 0.2%
Japan’s Topix rose 0.9%
Australia’s S&P/ASX 200 rose 0.4%
Euro Stoxx 50 futures rose 0.2%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.1656
The Japanese yen rose 0.1% to 148.34 per dollar
The offshore yuan was little changed at 7.1368 per dollar
The Australian dollar was little changed at $0.6522
Cryptocurrencies
Bitcoin rose 0.3% to $110,699.9
Ether fell 0.1% to $4,300.9
Bonds
The yield on 10-year Treasuries was little changed at 4.15%
Japan’s 10-year yield declined 1.5 basis points to 1.575%
Australia’s 10-year yield declined one basis point to 4.34%
Commodities
West Texas Intermediate crude fell 0.3% to $63.29 a barrel
Spot gold rose 0.2% to $3,551.75 an ounce
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