Asia-Pacific equities advance as weak U.S. jobs data fuels expectations for imminent Fed rate cut

Most major Asia-Pacific stock indexes climbed on Thursday, mirroring gains on Wall Street after softer U.S. labor figures intensified speculation that the Federal Reserve will lower interest rates at its policy meeting scheduled for 9-10 Dec.

Private payrolls firm ADP reported that U.S. companies shed 32,000 jobs in November, reversing the addition of 47,000 positions in October and undershooting the 40,000 increase forecast by economists surveyed by Dow Jones. In response, traders using the CME FedWatch Tool placed the probability of a rate reduction next week at 89%, a sharp rise from levels seen two weeks earlier.

Japan led regional gains. The benchmark Nikkei 225 surged 2.33% to 51,028.42, and the broader Topix added 1.92% to 3,398.21. Industrial and technology names dominated the advance. Robot maker Fanuc leapt more than 12% following news of a collaboration with U.S. chip designer Nvidia announced earlier in the week. Investment conglomerate SoftBank rallied for a second straight session, jumping over 9%. Semiconductor equipment supplier Lasertec climbed 6.24%, while Renesas Electronics advanced more than 10% amid reports that California-based SiTime is negotiating to buy Renesas’s timing-chip unit in a transaction that could value the business at up to US$2 billion, including debt.

In South Korea, the Kospi dipped 0.19% to 4,028.51, and the small-cap Kosdaq eased 0.23% to 929.83. Australia’s S&P/ASX 200 edged up 0.27% to 8,618.4, supported by gains in mining and financial shares.

Hong Kong’s Hang Seng Index gained 0.68% to 25,935.9, while the mainland CSI 300 rose 0.34% to 4,546.57 as investors assessed the outlook for further economic stimulus from Beijing.

Indian benchmarks were little changed. The Nifty 50 and the BSE Sensex both traded flat, but currency markets drew attention after the rupee opened at a record low of 90.4 per U.S. dollar, marking a third consecutive day of historic weakness. Shares of IndiGo, India’s largest airline, fell as much as 3% after the carrier canceled numerous flights since Monday. IndiGo attributed the disruptions to adverse weather, heightened air-traffic congestion and the introduction of new crew-rostering rules. Operational issues persisted for a fourth day, with Bengaluru’s airport indicating that 73 IndiGo flights were scrapped on Thursday.

Overnight in the United States, the Dow Jones Industrial Average advanced 408.44 points, or 0.86%, to 47,882.90. The S&P 500 added 0.30% to 6,849.72, and the Nasdaq Composite gained 0.17% to 23,454.09. Semiconductor and large-cap technology stocks with perceived exposure to artificial-intelligence demand initially weighed on broader indexes after a media report suggested that Microsoft was trimming software sales quotas tied to AI products. Microsoft disputed the report, and its shares recovered modestly in after-hours trade. Nvidia and Broadcom nevertheless finished lower, contributing to intraday volatility.

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Market participants now await Friday’s official U.S. nonfarm payrolls release for further confirmation of labor-market softness. Signs of cooling employment are viewed by investors as a key prerequisite for the Fed to begin easing policy after an aggressive tightening cycle that started in March 2022.

In fixed-income trading, yields on U.S. Treasury notes retreated during Asian hours, reflecting heightened expectations of impending monetary accommodation. Currency markets were relatively stable outside India; the Japanese yen held near ¥146 per dollar, and the Australian dollar hovered around US$0.66.

Energy prices were mixed. Brent crude futures slipped below US$77 a barrel as traders weighed sluggish demand growth against supply-cut commitments by major producers.

Looking ahead, central-bank meetings in Japan and the euro zone later this month, along with December inflation readings across several G-20 economies, remain pivotal catalysts that could influence regional equity performance and global risk sentiment.

Crédito da imagem: Frank Lee | Moment | Getty Images