(Bloomberg) — Asian shares followed their US peers higher Friday ahead of a key jobs report as traders weighed the outlook for inflation and growth.
Stocks rose in Japan, Korea and Australia while US futures fluctuated. On Thursday, the S&P 500 rose 1.8%, led by gains in consumer discretionary shares, while the tech-heavy Nasdaq 100 added 2.8%.
Markets are shut in Hong Kong and China, where officials have vowed to carry out a slew of government policies to stimulate the economy. The offshore yuan rose amid thin trading in Asia.
A Bloomberg gauge of the dollar steadied after overnight losses, while the yen held near the psychologically important 130 level against the greenback. Benchmark Treasury yields edged up to 2.92%.
Investors remain on edge as some fear the pace of US monetary tightening could throw the world’s largest economy into a recession. Friday’s May labor report is likely to show the smallest gain in jobs since April 2021 alongside a down shift in average hourly earnings growth, Bloomberg Economics said.
“We really do just need a lot more data, not one data point, not just the jobs data,” Carol Schleif, BMO Family Office LLC deputy chief investment officer, said on Bloomberg TV. “The potential range of outcomes is wider than it has been. We do think that you are going to see a lot of volatility through the summer.”
Federal Reserve Vice Chair Lael Brainard said it was hard to see a case for a September pause in rate hikes and that increases of 50 basis points in June and July seemed reasonable.
“We believe a slight lean toward defensive sectors and away from the growth-oriented areas of this market still make sense,” said Scott Brown, technical market strategist at LPL Financial. “Outside of this recent rally, very little about this market has changed from a technical standpoint and that makes us wary of calling the all-clear.”
Meanwhile, OPEC+ agreed to increase the size of its oil-supply hikes by about 50% in July and August, bending to pressure by major consumers including the US to fill the gap created by sanctions on Russian supplies. Yet oil headed for a sixth weekly gain and remains an important driver of inflationary pressures.
How will markets be affected by the Fed’s quantitative tightening? QT officially starts Wednesday and is the theme of this week’s MLIV Pulse survey. Click here to participate anonymously.
Here are some key events to watch this week:
- US May employment report Friday
- The UN’s Food and Agriculture Organization releases its monthly food price index at a time of maximum concern about global supplies on Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 12:20 p.m. in Tokyo. The S&P 500 rose 1.8%
- Nasdaq 100 futures were steady. The Nasdaq 100 climbed 2.8%
- Topix index climbed 0.3%
- Australia’s S&P/ASX 200 Index increased 0.7%
- Kospi index rose 0.4%
Currencies
- The Bloomberg Dollar Spot Index was steady
- The Japanese yen was little changed at 129.98 per dollar
- The offshore yuan rose 0.4% to 6.6278 per dollar
- The euro was at $1.0755
Bonds
- The yield on 10-year Treasuries rose one basis point to 2.92%
- Australia’s 10-year bond yield rose two basis points 3.52%
Commodities
- West Texas Intermediate crude fell 0.2% to $116.69 a barrel
- Gold futures were at $1,868.27 an ounce
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
