Equities in Asia were set for early gains after stocks and bonds rallied on Wall Street Thursday, ahead of crucial US jobs data due later Friday.
Share futures for Australia and Hong Kong edged higher while markets in Japan and mainland China are closed for a holiday. The S&P 500 advanced 0.9% and tech-heavy Nasdaq 100 climbed 1.3% on Thursday, only to strengthen further in futures trading following better-than-estimated results from Apple Inc..
The company’s stock rose more than 6% in post-market trading after a small gain during regular hours. The iPhone maker predicted a return to growth in the current period, after posting sales declines in five of the past six quarters, hurt by a sluggish smartphone market and headwinds in China.
The yen strengthened early Friday after ending the Thursday session at the highest level against the greenback in almost three weeks. The currency has likely faced official support, with estimates indicating the country spent more than $20 billion in its latest round of intervention. An index of the dollar was steady after falling by the most since December on Thursday.
Australian and New Zealand yields fell Friday after Treasuries rallied across the curve Thursday. The US 10-year yield fell five basis points to 4.58%, while the policy-sensitive two-year yield dropped nine basis points. Treasuries trading in Asia will be closed due to the holiday in Japan.
The moves come ahead of US nonfarm payrolls data that will help identify the path forward for Federal Reserve policy. Economists surveyed by Bloomberg forecast a 240,000 gain in payrolls, which would be the slowest pace since November.
The Fed decided Wednesday to leave the target range for the benchmark rate at 5.25% to 5.5% following a slew of data that pointed to lingering price pressures. Yet Chair Jerome Powell said it’s unlikely that the Fed’s next move would be to raise rates.
“While the Fed appears to have all but ruled out a rate hike, it also made clear it’s willing to keep rates higher for longer,” said Chris Larkin at E*Trade from Morgan Stanley. “The markets will be hungry for any data suggesting the economy isn’t heating up any more than it did in the first quarter.”
A survey conducted by 22V Research shows that 30% of the investors polled think Friday’s jobs report will be “risk-on,” 27% expect a “risk-off” reaction, and 43% said “mixed/negligible.” Among the labor indicators, the tally showed investors will be paying the most attention — by far — to average hourly earnings.
“Markets will likely still react more to a weaker print than strong data as investors have turned more hawkish,” said Oscar Munoz and Gennadiy Goldberg at TD Securities. “However, the recent string of upside surprises to economic data is unlikely to be sustained for long as expectations continue to reset higher.”
The options market is betting that stocks will swing widely after Friday’s US jobs report, which traders expect will offer more clarity on how much the Fed may cut interest rates this year.
The S&P 500 is expected to move 1.2% in either direction after the release, based on the cost of at-the-money puts and calls expiring Friday, according to Stuart Kaiser, Citigroup Inc.’s head of US equity trading strategy. That figure, based on the prices of S&P straddles as of Wednesday’s close, is the largest implied swing ahead of an employment report since March 2023, he said.
In Asia, data set for release includes Thai inflation and retail sales for Hong Kong and Singapore.
Oil edged higher early Friday after ending the prior session little changed. Gold was also flat early Friday at around $2,303 per ounce. – Bloomberg
