(Bloomberg) — Asian equities were set to climb Friday following fresh highs for US stocks as strong jobs data eased concerns the economy slowing down.
Equity index futures for Japan and Australia rose, while those for Hong Kong were fractionally lower. The S&P 500 gained 0.8% and the Nasdaq 100 advanced 1% Thursday, leaving each index at the highest closing level on record in a shortened session ahead of Friday’s Independence Day holiday. Contracts for US stocks were little changed in early Asian trading.
US markets closed prior to the House passing President Donald Trump’s tax bill that includes some $4.5 trillion in tax cuts that had weeks earlier sparked concerns over rising deficits.
Treasuries fell and the dollar rose in a sign traders see less pressure on the Federal Reserve to cut interest rates after US job growth exceeded expectations in June. Swap traders saw almost no chance of a July Fed cut, compared with a roughly 25% probability seen before the data. The chance of a move in September ebbed to about 70%.
“The solid June jobs report confirms that the labor market remains resolute and slams the door shut on a July rate cut,” said Jeff Schulze at ClearBridge Investments. “A wage-price inflationary spiral shouldn’t be a near-term concern, setting up something resembling a ‘Goldilocks’ scenario.”
Meanwhile, traders remain on alert after Trump said his administration may begin sending out letters to trading partners as soon as Friday setting unilateral tariff rates ahead of a July 9 deadline for negotiations.
Asked Thursday if more deals were on the way, Trump responded that “we have a couple of other deals, but you know, my inclination is to send a letter out and say what tariffs they are going to be paying.”
In Asia, Hong Kong’s de-facto central bank bought the city’s dollar again to defend its foreign-exchange peg. The Hong Kong dollar has had a wild ride recently with two previous rounds of intervention failing to send funding costs high enough to dampen bearish currency bets.
Elsewhere, data set for release in the region included inflation for the Philippines, household spending for Australia and retail sales in Singapore.
Rate Outlook
Treasury Secretary Scott Bessent on Thursday questioned Fed officials’ judgment on rates, reiterating his view that two-year yields are a signal their benchmark rate is too high.
“The committee seems to be a little off here in their judgment,” Bessent said in an interview on Fox Business, referring to the Fed’s rate-setting Federal Open Market Committee.
Headline numbers from the June jobs report took pressure off the Fed to consider a rate cut later this month, but the solid figures masked weakness in private payrolls and other potential warning signs of deterioration in the labor market. That’s a trend that could raise the stakes later in the year.
“While today’s report points to still firm job creation, we don’t think the underlying details of the report are as supportive as suggested by the top-line beat,” said Oscar Munoz and Gennadiy Goldberg at TD Securities. “The story of a low-fire, low-hire labor market continues to hold for now.”
In commodities, gold fell Thursday while oil prices also retreated as media reports indicated OPEC+ has begun discussing another production increase.
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 7:13 a.m. Tokyo time
- Hang Seng futures fell 0.3%
- S&P/ASX 200 futures rose 0.3%
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro was little changed at $1.1754
- The Japanese yen was little changed at 144.96 per dollar
- The offshore yuan was little changed at 7.1692 per dollar
- The Australian dollar was little changed at $0.6570
Cryptocurrencies
- Bitcoin fell 0.2% to $109,765.51
- Ether fell 0.2% to $2,596.35
Commodities
- West Texas Intermediate crude rose 0.1% to $67.07 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
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