(Bloomberg) — Most Asian stocks rose Friday and the dollar held a drop after cyclicals led Wall Street to a record high ahead of a U.S. jobs report that will shape views on the outlook for Federal Reserve monetary policy.
MSCI Inc.’s Asia-Pacific gauge climbed for a sixth day, the longest streak since January, aided by Japan, where equities jumped amid signs that Prime Minister Yoshihide Suga plans to resign after his approval ratings slid. U.S. futures advanced after energy shares helped the S&P 500 to a new peak.
Chinese technology stocks fell, with investors continuing to weigh Beijing’s regulatory crackdown. President Xi Jinping said the nation will set up a new stock exchange to provide financing for innovative smaller firms. Traders were also monitoring the twists at indebted developer China Evergrande Group.
The payrolls report will color expectations about when the Fed might taper pandemic-era stimulus and how long it can wait before hiking interest-rates. The U.S. probably added 725,000 jobs in August — a more moderate pace versus the prior two months, but stronger than early 2021. The U.S. 10-year Treasury yield was little changed and the dollar was at a four-week low.
The jobs figures are another potential test of the prevailing calm in financial markets, which so far have weathered risks to economic reopening from coronavirus variants and the prospect of less expansive monetary policy. Goldman Sachs Group Inc. strategists said concerns about economic expansion are overdone, pointing to possible gains in cyclical assets in the near future.
Pre-payrolls “asset market exuberance appears to be more than just Jackson Hole after-glow,” Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore, wrote in a note. “Instead, the evidence suggests markets may be getting high on bets” of a low jobs report that nudges the Fed to defer tapering for longer, he said.
In the latest Fed comments, Atlanta President Raphael Bostic said “we’re going to let the economy continue to run until we see signs of inflation,” before stepping in on interest rates. U.S. data showed initial jobless claims declined to a fresh pandemic low, while factory orders beat expectations.
Traders are continuing to monitor the political debate over planned U.S. fiscal outlays. Senator Joe Manchin is demanding a “strategic pause” in action on President Joe Biden’s economic agenda, potentially imperiling the $3.5 trillion tax and spending package.
Elsewhere, oil was near $70 a barrel on bets that the market can absorb additional supply from OPEC+ as the U.S. Gulf grapples with Hurricane Ida’s impact. Bitcoin slipped back to about $49,000 after briefly surpassing $50,000 a day earlier.
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.2% as of 12:31 p.m. in Tokyo. The S&P 500 rose 0.3%Nasdaq 100 futures added 0.1%. The Nasdaq 100 fell less than 0.1%Japan’s Topix index rose 1.6%Australia’s S&P/ASX 200 increased 0.7%South Korea’s Kospi advanced 0.7%Hong Kong’s Hang Seng index fell 0.6%China’s Shanghai Composite index slipped 0.2%Euro Stoxx 50 futures were flat
Currencies
The Bloomberg Dollar Spot Index was steadyThe euro was at $1.1878The offshore yuan was at 6.4544 per dollarThe Japanese yen was at 110.01 per dollar, down less than 0.1%
Bonds
The yield on 10-year Treasuries rose about one basis point to 1.29%The yield on Australia’s 10-year bond was at 1.21%
Commodities
West Texas Intermediate crude was at $69.86 a barrel, down 0.2%Gold was at $1,813.70 an ounce, rising 0.2%
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