(Bloomberg) — Asian shares fluctuated with investors staying on the sidelines in the leadup to US jobs report, awaiting fresh data after recent prints signaled President Donald Trump’s trade war was hurting the US economy.
The MSCI Asia Pacific Index swung between gains and losses after Trump’s announcement of a trade deal with Vietnam had helped the S&P 500 close at another record high Wednesday. The dollar was steady Thursday, hovering around three-year lows. Equity-index futures for the US and Europe were flat. Gold dipped for the first time in four days.
Treasuries inched up Thursday. Yields rose in the prior session following heavy selling in the UK, where concerns about Chancellor of the Exchequer Rachel Reeves’ future reignited questions over the nation’s fiscal position. In Japan, 10-year bonds declined ahead of a closely watched auction of 30-year sovereign notes at 12:35 p.m. in Tokyo.
The cross-asset moves underscored cautious optimism as traders contend with pockets of uncertainty ahead of jobs data that will help identify the path ahead for interest rates. With stocks at a record high even after Trump ratcheted up trade tensions, investors are closely monitoring economic data before adding to their portfolios.
“Investors are generally adopting a cautious, wait-and-see approach before the jobs report to be announced later today,” said Tomo Kinoshita, global market strategist at Invesco Asset Management in Tokyo. A growing number of US indicators are pointing to a potential economic slowdown, he said.
On the Vietnam trade deal, Trump said that the Asian country had agreed to drop all levies on US imports. A 20% tariff will be placed on Vietnamese exports to the US, with a 40% levy on any goods deemed to be transshipped through the country. The deal risks provoking retaliatory steps from China, according to Bloomberg Economics.
News of the trade deal boosted Nike Inc. and some exporter stocks amid hopes the accord will avert a potential supply-chain catastrophe. The country set its daily reference rate for the dong at a record low Thursday.
“Investors have become desensitized by Trump’s frequent erratic direction changes,” said Vey-Sern Ling, a managing director at Union Bancaire Privee. “So far most of these ‘deals’ don’t amount to much and the eventual implementation remains uncertain.”
Meanwhile, UK Prime Minister Keir Starmer said Reeves will stay on as Chancellor of the Exchequer, as he sought to draw a line under speculation about her future that sparked the bond selloff.
Members of Starmer’s ruling Labour Party forced the government to scrap £5 billion ($6.8 billion) worth of cuts to welfare spending on Tuesday evening — making it even harder for Reeves to tame the government’s budget deficit.
The pound was little changed against the dollar in Asian trading.
Like in the UK, investors have raised concerns in the US, where Trump’s signature economic legislation stalled in the House Wednesday afternoon as Republican fiscal conservatives delayed a key procedural vote. Trump later said on social media the House is ready to vote tonight on the tax bill.
In Japan, the auction of 30-year sovereign notes Thursday is shaping up as a barometer of policymakers’ success in quelling debt-market turmoil that pushed yields on the nation’s super-long bonds to record highs in May. While yields have stepped down from their peaks, markets remain wary, especially after the moves in the UK and the US overnight.
Back in the US, monthly nonfarm payroll data due later Thursday — a day earlier than usual due to a holiday — will show slower hiring and the highest unemployment rate since 2021 as the Trump administration’s trade and immigration policy shifts start to leave an imprint.
Separate private payrolls data from ADP Research on Wednesday showed employment at US companies fell for the first time in over two years. Despite signs of a downshift, Federal Reserve Chair Jerome Powell has repeated the labor market remains solid.
Following ADP Research’s private payrolls data, traders added to wagers on at least two rate reductions this year, with the first coming in September. If the upcoming jobs report shows further weakness, traders reckon the Fed could move up cuts.
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 11:37 a.m. Tokyo time
- Japan’s Topix fell 0.3%
- Australia’s S&P/ASX 200 fell 0.6%
- Hong Kong’s Hang Seng fell 1.1%
- The Shanghai Composite fell 0.1%
- Euro Stoxx 50 futures were little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.1800
- The Japanese yen was little changed at 143.67 per dollar
- The offshore yuan was little changed at 7.1603 per dollar
Cryptocurrencies
- Bitcoin fell 0.5% to $108,659.08
- Ether fell 1.2% to $2,560.03
Bonds
- The yield on 10-year Treasuries declined two basis points to 4.26%
- Japan’s 10-year yield advanced 1.5 basis points to 1.440%
- Australia’s 10-year yield advanced two basis points to 4.17%
Commodities
- West Texas Intermediate crude fell 0.9% to $66.86 a barrel
- Spot gold fell 0.3% to $3,348.52 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Winnie Hsu.
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