(Dec 4): Asian stocks looked set to drift higher at Thursday’s open, tracking an advance in US peers after more evidence of a slowing job market supported the case for the Federal Reserve to lower interest rates next week.
Equities edged higher in Australia while stock-index futures for Japan and Hong Kong also climbed. Contracts for US shares were steady in Asia after the S&P 500 advanced 0.3% and the Nasdaq 100 rose 0.2% Wednesday. Treasuries climbed across the curve, pushing two-year yields down to around 3.48%. A gauge of the dollar dropped 0.4%, the yen edged up and Bitcoin hovered near US$93,500 after recent gains.
Data on Wednesday showed US companies shed payrolls in November by the most since early 2023, reinforcing concerns about a more pronounced labor market weakening. Swaps pricing indicated rising expectations for a December cut Wednesday, with traders assigning more than a 90% chance to a 25-basis-point reduction. Separately, US services activity expanded at a slightly faster pace, while a measure of prices paid dropped to a seven-month low.
Despite the apparent confidence among investors, policymakers have been torn as to whether they’ll cut rates for a third straight meeting as they attempt to balance the slowdown in the job market with still-elevated inflation.
“The faltering labor market will be the focus for the Fed at their December meeting,” said Jeff Roach at LPL Financial. “Since earlier this year, when we started to see a material weakening in the jobs market, I have believed labor demand is weak enough for the Fed to cut, including this month.”
In Asia, data set for release included Australian trade and household spending and consumer confidence in Thailand. Elsewhere, US Commerce Secretary Howard Lutnick said that the US is expecting a large investment pledge from Taiwan in trade talks.
See also: Asian stocks eye cautious gains as crypto rebounds
US moves
Notably, gains for US benchmarks came despite weakness in most megacaps. Shares in Salesforce Inc. rose in post-market trading after the company delivered an outlook for revenue in the current period that topped analysts’ estimates.
Nvidia Corp.’s Jensen Huang is unsure whether China would accept its H200 chips, should the US relax restrictions. Microsoft Corp. slid 2.5% on a report of lower demand for some artificial-intelligence tools even as the company said aggregate sales quotas for AI products have not been reduced.
See also: ASX says company announcements blackout resolved
Before their final policy meeting of the year, Fed officials will get a dated reading on their preferred inflation gauge. On Friday, the September income and spending report is due to be released — long delayed because of the government shutdown.
The figures will include the personal consumption expenditures price index and a core measure that excludes food and energy. Economists project a third straight 0.2% increase in the core index. That would keep the year-over-year figure hovering just below 3%, a sign that inflationary pressures are stable, yet sticky.
“Right now, the data argues for additional Fed funds rate cuts. US labor demand is weak, consumer spending is showing early signs of cracking, and upside risks to inflation are fading,” said Elias Haddad at Brown Brothers Harriman & Co.
In commodities, silver traded near an all-time high on the reinforced bets of a Fed cut, while gold was little changed. Oil edged up after a fresh round of US-Russia talks failed to reach a deal to end Moscow’s war in Ukraine, boosting fears that restrictions on Russian oil supply could remain in place for longer.
Copper rallied to a fresh record on Wednesday as a surge in orders to withdraw metal from London Metal Exchange warehouses compounded worries that potential US tariffs will fuel a global supply squeeze.
Some of the main moves in markets:
Stocks
To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section
- S&P 500 futures were little changed as of 8:34 a.m. Tokyo time
- Hang Seng futures rose 0.3%
- Australia’s S&P/ASX 200 rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at US$1.1669
- The Japanese yen was little changed at 155.15 per dollar
- The offshore yuan was little changed at 7.0568 per dollar
- The Australian dollar was little changed at US$0.6600
Cryptocurrencies
- Bitcoin fell 0.2% to US$93,571.89
- Ether rose 0.6% to US$3,183.29
Bonds
- Australia’s 10-year yield declined two basis points to 4.62%
Commodities
- West Texas Intermediate crude rose 0.1% to US$59.01 a barrel
- Spot gold was little changed
Uploaded by Jason Ng
