Stocks Rebound as Jobs Data Calms Market Jitters: Market Mixed

(Bloomberg) — Asian stocks were poised for gains on Friday after signs of resilience in the U.S. labor market boosted U.S. stocks.

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Stock futures in Japan, Australia and Hong Kong rose at least 1%, with Nikkei 225 contracts rising more than 2.5%. On Wall Street, the S&P 500 had its best day since November 2022, while the Nasdaq advanced 3.1%.

The recovery was driven by jobless claims in the US, which showed that fewer people applied for unemployment benefits than expected. The data eased concerns about the labor market after worse-than-expected employment data released on Friday last week fueled recession fears that spread across global markets.

“It’s been quite a week,” said Liz Young Thomas of Social Finance Inc. “Up, down and everywhere. We learned how sensitive markets are now to cooling US economic data, how broad the impact of the yen carry trade could be, and how investors are conditioned to expect rate cuts as a balm for any problems.”

Treasuries fell across the curve on Thursday – with the sell-off led by shorter maturities. Bonds maintained their losses after a weak sale of $25 billion of 30-year government debt. Swap traders further scaled back bets on aggressive Federal Reserve easing in 2024. Cryptocurrencies soared as investors returned to riskier assets in financial markets.

The global repricing has been so sharp that, at one point, interest rate swaps implied a 60% probability of an emergency rate cut by the Fed next week – well before its next scheduled meeting in September. Current prices suggest around 40 basis points of cuts for September.

Oil rose in a recovery after a decline earlier this week, amid simmering tensions in the Middle East. Gold maintained a recovery from Thursday, ending declines in the previous five sessions.

Meanwhile, steel and aluminum producers in Canada have urged Prime Minister Justin Trudeau’s government to quickly impose new tariffs on Chinese products, saying metals from the Asian powerhouse are flooding the Canadian market and threatening local jobs.

In Asia, inflation and producer prices in China are forecast, while data on money supply and new loans could be released as early as Friday. Markets are closed in Singapore.

US moves

All major S&P 500 groups advanced, while the Russell 2000 of smaller companies rose 2.4%. Nvidia Corp. led gains in megacaps. Eli Lilly & Co. soared on an upbeat outlook driven by sales of its weight-loss drugs.

The story continues

Still, Wall Street professionals remain uneasy about whether Monday’s sell-off in global stocks marked the worst of the correction — or whether there’s more to come.

“We are mobilizing today because of unemployment benefit claims!” Neil Dutta of Renaissance Macro Research said. “This is unusual. If you have some negative surprises in next week’s data, guess what happens? This will only fuel the idea that the Fed is a little behind the times.”

While the recent stock market crisis has generated some froth, U.S. stocks remain at risk of more severe declines if growth continues to slow and the Fed “does not show urgency” in easing monetary policy, according to Dubravko Lakos- JPMorgan Chase & Co. bujas

Stocks are no longer a “one-sided upside trade, but rather a growing bilateral debate about downside risks to growth, Fed timing, crowded positioning, rich valuation and growing electoral and geopolitical uncertainties,” Lakos-Bujas said.

Some of the main movements in the markets:

Actions

• S&P 500 futures were little changed as of 7:17 a.m. Tokyo time

• Hang Seng futures rose 1.5%

• S&P/ASX 200 futures rose 1.1%

Coins

• The Bloomberg Dollar Spot Index fell 0.2%

• The euro was little changed at $1.0918

• The Japanese yen was little changed at 147.27 per dollar

• The offshore yuan was little changed at 7.1831 per dollar

• The Australian dollar was little changed at $0.6590

Cryptocurrencies

• Bitcoin rose 2% to $60,723.13

• Ether rose 2% to $2,621.82

goods

• West Texas Intermediate crude fell 0.3% to $75.95 a barrel

• Spot gold fell 0.1% to $2,425.01 an ounce

This story was produced with help from Bloomberg Automation.

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