Stock Markets Continue to Rally as U.S. Recession Fears Ease: Markets Wrap

(Bloomberg) — Global stocks continued their recovery in Asia, tracking gains on Wall Street after signs of resilience in the U.S. labor market eased recession fears.

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Stocks from Japan to South Korea and Australia rose. While Hong Kong shares held on to gains, mainland Chinese shares lost steam as perceptions grew that better-than-expected inflation was mainly due to seasonal factors such as weather. Markets were closed in Singapore.

U.S. stock futures rose in Asia, following a rally on Wall Street on Thursday. The S&P 500 had its best day since November 2022, while the Nasdaq advanced 3.1%.

The dollar fell, with an index tracking emerging market currencies rising to its highest level since April 2022. Treasury yields in Asia fell after a three-day rally.

Risk appetite improved after a better U.S. jobless claims report eased recession fears sparked by last week’s worse-than-expected employment data. Focus will now shift to a fresh batch of U.S. economic indicators due next week, including consumer prices.

“The storm clouds have cleared” for now for Asian markets, said Tony Sycamore, market analyst at IG Australia. “I think we’re heading higher now until we see more growth concerns, but Japan could be off the radar for investors for a while,” he added.

It remains unclear how long the recent recovery will last as investors continue to digest various signals from policymakers. Kansas City Federal Reserve President Jeffrey Schmid, for example, indicated he is not ready to support interest rate cuts as inflation runs above target, according to comments he made in the United States on Thursday.

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Swap traders have also pared their bets on an aggressive Fed rate cut in 2024. The global repricing has been so sharp that interest-rate swaps were at one point implying a 60% chance of an emergency Fed rate cut next week — well ahead of its next scheduled meeting in September. Current rates imply about 40 basis points of cuts in September.

In Japan, shares of Tokyo Electron Ltd. jumped after the company raised its profit forecast for the fiscal year ending in March and reported a better-than-expected rise in sales.

The yen steadied against the dollar after three days of weakness.

Oil prices rose slightly after a rally on Thursday, on the back of rising tensions in the Middle East, while gold fell.

Meanwhile, Canadian steel and aluminum producers are urging 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.

Main events this week:

Some key movements in the markets:

Stocks

  • S&P 500 futures were up 0.2% as of 1:15 p.m. in Tokyo.

  • Nasdaq 100 futures rose 0.3%.

  • Japan’s Topix index rose 1%

  • Australia’s S&P/ASX 200 rose 1.3%.

  • Hong Kong’s Hang Seng Index rose 1.8%.

  • The Shanghai Composite Index rose 0.1%.

  • Euro Stoxx 50 futures rose 0.4%.

Currencies

  • The Bloomberg Dollar Index fell 0.2%.

  • The euro was little changed at $1.0922.

  • The Japanese yen was little changed at 147.16 yen to the dollar.

  • The offshore yuan rose 0.2% to 7.1664 against the dollar.

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Cryptocurrencies

  • Bitcoin rose 2.8% to $61,211.98

  • Ether price rose 4.7% to $2,692.46

Bonds

Goods

  • West Texas Intermediate crude rose 0.2% to $76.33 a barrel.

  • Spot gold fell 0.3 percent to $2,421.39 an ounce.

This story was produced with the help of Bloomberg Automation.

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