Asian stocks rise as weak US jobs data eases Fed rate hike fears

SINGAPORE: Asian stocks rose on Friday as weaker US jobs data reduced expectations of an imminent Federal Reserve rate hike, while regional activity indicators pointed to continued economic expansion in June.

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 2.2% after two consecutive sessions of losses.

South Korea’s Kospi moved between gains and losses before rising more than 6%, supported by buying in chipmaker stocks.

Japan’s Nikkei 225 reversed early losses and traded 1.2% higher, while S&P 500 e-mini futures gained 0.4%.

Purchasing Managers’ Index data released on Friday showed stronger activity across parts of Asia.

Japan’s services sector returned to expansion in June after stalling in the previous month.

China’s services activity expanded at a slightly slower pace, but overseas demand rose at the fastest rate in 20 months.

Capital Economics analysts said China’s PMI readings remained healthy by recent standards and suggested stronger economic momentum across the second quarter.

In the United States, data released on Thursday showed job growth slowed sharply in June, while payroll gains for the previous two months were revised lower.

The unemployment rate eased to 4.2% from 4.3% in May, as workers left the labour force and the participation rate fell to its lowest level in more than five years.

Westpac analysts said the figures challenged expectations that the Federal Reserve remained on track to raise rates in the second half of the year.

Fed funds futures showed a 46.8% probability that the US central bank will keep rates unchanged at its September 15-16 meeting, up from 35.8% a day earlier, according to CME Group’s FedWatch tool.

On Wall Street, the S&P 500 ended flat overnight, the Nasdaq Composite fell 0.8% and the Dow Jones Industrial Average closed at a record high.

US markets will remain closed on Friday for the Independence Day holiday.

In currency markets, the US dollar was flat against the yen at 161.06, with thinner holiday liquidity keeping traders alert to possible Japanese intervention.

The dollar index, which tracks the US currency against six major peers, fell 0.3% to 100.71.

In early European trading, pan-regional futures rose 0.3%, German DAX futures gained 0.4% and FTSE futures edged up 0.1%.

Brent crude futures rose 0.6% to $72.26 a barrel in Asian trade, while gold climbed 1.2% to $4,174.16.

Bitcoin was steady at $61,549.17, while ether edged up 0.1% to $1,706.26.