(Bloomberg) — Hong Kong stocks led gains among Asian equities ahead of US jobs data that will identify the path ahead for interest rates. A rally in oil prices halted after the commodity had its biggest one-day jump in almost a year.
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Equities in Japan and South Korea advanced while stocks in Australia and India dropped. Markets in mainland China were shut for a holiday. A gauge of Chinese shares in Hong Kong advanced as traders assessed its recent rally’s sustainability and await details of fiscal stimulus and holiday spending. Futures contracts for the S&P 500 and Nasdaq 100 were steady.
An index of dollar declined marginally, but is still poised for the biggest weekly gain in nearly six months as traders pared back expectations for aggressive US rate cuts. Treasuries were flat in Asian trading after selling off on Thursday, increasing yields to levels not seen since September.
West Texas Intermediate and Brent crude eased slightly after each rose more than 5% to a one-month high on Thursday. Earlier gains came after puzzling comments from President Joe Biden, who told reporters the US was discussing whether to support potential Israeli strikes against Iranian oil facilities.
Investors are concerned that, should Israel strike critical Iranian assets, the Islamic Republic will lash out and escalate the conflict, dragging in more countries and potentially disrupting global energy shipments. Israel said it bombed more than a dozen Hezbollah targets in Beirut on Thursday.
“The market fear is that there could be supply disruptions coming out of Iran,” said Tai Hui, chief Asia market strategist for JPMorgan Asset Management, on Bloomberg Television. “Demand for oil should remain healthy, but at the same time the risk to the supply side is very much there.”
The initial buying frenzy in Chinese stocks after Beijing’s stimulus is waning as traders take profit and await policy details and holiday spending data for further confidence. Invesco Ltd.’s chief investment officer for Hong Kong and China, Raymond Ma, who predicted double-digit returns in Chinese equities this year, said there are signs the surge has gone too far for some stocks. Still, strategists at HSBC Holdings Plc and BlackRock Inc. are among Wall Street heavyweights turning bullish on the once beaten-down market.
The yen strengthened 0.5% against the dollar, paring some of its recent losses from earlier this week after Japanese Prime Minister Shigeru Ishiba had said the nation isn’t ready for another interest-rate increase.
Amid all the geopolitical uncertainty, investors are looking for further signals on the health of the US economy, with the monthly payrolls report due on Friday. The unemployment rate is forecast to hold steady at 4.2% in September while payrolls are expected to rise by 150,000.
“If the unemployment rate ticks up, I wouldn’t be surprised that markets would shift back toward expecting 50 basis points and then it is a question of how the Fed may react,” Kallum Pickering, chief economist at Peel Hunt, said on Bloomberg Television.
Other economic signs showed robustness in the US economy. The Institute for Supply Management’s index of services posted its best reading since February 2023, ahead of Wall Street estimates. Applications for US unemployment benefits rose slightly last week to a level that is consistent with a limited number of layoffs. Continuing claims, a proxy for the number of people receiving benefits, were little changed from the previous week.
“The bias in USD/Asia pairs in the near-term is correspondingly for further upside,” Alvin T. Tan, head of Asia FX strategy at RBC Capital Markets, writes in a note. “The backdrop is getting better for USD amid improving economic dataflow.”
Key events this week:
Some of the main moves in markets:
Stocks
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S&P 500 futures were little changed as of 1:55 p.m. Tokyo time
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Nikkei 225 futures (OSE) rose 0.1%
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Japan’s Topix rose 0.4%
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Australia’s S&P/ASX 200 fell 0.8%
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Hong Kong’s Hang Seng rose 1.7%
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Euro Stoxx 50 futures rose 0.1%
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Nasdaq 100 futures were little changed
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.1026
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The Japanese yen rose 0.5% to 146.21 per dollar
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The offshore yuan fell 0.2% to 7.0620 per dollar
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The Australian dollar was little changed at $0.6841
Cryptocurrencies
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Bitcoin rose 0.3% to $60,957.2
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Ether rose 1.3% to $2,371.64
Bonds
Commodities
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West Texas Intermediate crude was little changed
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Spot gold rose 0.3% to $2,663.93 an ounce
This story was produced with the assistance of Bloomberg Automation.
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