Hong Kong (AFP) – Asian stocks rose Friday as tech firms enjoyed a much-needed rebound from the heavy selling of recent weeks, with a big miss on US jobs creation soothing worries over a Federal Reserve interest rate hike. Regional markets have been in traders’ firing line for some time, as the prospect of higher borrowing costs—fuelled by a fresh inflation spike—and concerns about extended valuations have sparked questions about how far the AI equity boom has to run.
That has seen chip firms such as South Korea’s SK hynix and Japan’s Kioxia plunge from record highs, along with benchmark indexes in Seoul and Tokyo. But the selling paused on Friday as investors welcomed data showing the US economy added less than half the jobs than forecast in June, while figures for the previous two months were also revised down. The readings suggested the labour market was not as strong as previously thought and give the Fed some breathing room to hold off an expected rate hike for now.
Speculation has grown since the central bank’s June policy meeting that it will announce an increase this year as new boss Kevin Warsh said price stability was his key goal, citing persistently elevated inflation. Seoul’s Kospi closed up 5.8 percent—having tanked around 20 percent from its June 19 record high—boosted by strong rallies in SK hynix and Samsung. Tokyo climbed more than one percent, along with Hong Kong, Manila, Bangkok, and Jakarta. There were also gains in Shanghai, Singapore, Wellington, Taipei, and Mumbai. London and Paris advanced, while Frankfurt extended gains after closing Thursday at a record high. However, the likelihood of a US rate hike before the end of the year remains.
“Not long ago the Fed had an easing bias which was primarily fuelled by concerns over the labour market,” wrote Rodrigo Catril at National Australia Bank. “Recent improvement in payrolls alongside higher inflation shifted the Fed bias towards neutral with the new Fed Chair emphasising the need for the Fed ‘to re-commit to deliver price stability.’ The US labour market today is not strong enough to instigate rate hikes but importantly is no longer a handbrake or impediment to hikes, leaving the Fed solely focused on the other side of its mandate.”
In other words, getting inflation down after five years of overshoot and six months of more recent core reacceleration. The gains in Asia followed a mixed day on Wall Street, where the Nasdaq sank 0.8 percent but the Dow jumped more than one percent on the last day before a long Independence Day weekend. Analysts said the retreat in tech plays was unsurprising considering the eye-watering gains they have made over the past two years, while traders were rotating from the sector into other industries where bargains can be found.
The dollar extended losses seen in the wake of the jobs data as investors lowered their rate expectations, while non-yielding gold—which benefits from lower interest rates—climbed towards $4,200 for the first time in two weeks. Oil prices held recent losses fuelled by increased traffic through the Strait of Hormuz and on hopes for progress in US-Iran talks.
– Key figures around 0810 GMT –
Seoul – Kospi: UP 5.8 percent at 8,088.34 (close)
Tokyo – Nikkei 225: UP 1.5 percent at 69,744.07 (close)
Hong Kong – Hang Seng Index: UP 1.3 percent at 23,350.03 (close)
Shanghai – Composite: UP 0.4 percent at 4,043.64 (close)
London – FTSE 100: UP 0.3 percent at 10,682.03
Dollar/yen: DOWN at 160.76 yen from 161.12 yen on Thursday
Euro/dollar: UP at $1.1456 from $1.1429
Pound/dollar: UP at $1.3373 from $1.3345
Euro/pound: UP at 85.67 pence from 85.65 pence
West Texas Intermediate: DOWN 0.1 percent at $68.61 a barrel
Brent North Sea Crude: FLAT at $71.80 a barrel
New York – Dow: UP 1.1 percent at 52,900.07 (close)
© 2024 AFP
