Stocks Extend Rebound as US Recession Worries Ebb: Markets Wrap

(Bloomberg) — A recovery of global shares continued in Asia, tracking gains on Wall Street after signs of resilience in the US labor market eased concerns over a recession.

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Stocks rose from Japan to South Korea and Australia. While Hong Kong equities maintained their gains, those in mainland China lost momentum as perceptions grew that a better-than-expected inflation print mainly resulted from seasonal factors like weather. Markets are closed in Singapore.

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

The dollar slid, with a gauge tracking emerging-market currencies rising to its highest level since April 2022. Treasury yields edged lower in Asia after a three-day increase.

Risk appetite improved after a better US jobless claims report alleviated fears of a recession triggered by last week’s worse-than-expected employment data. The focus will now shift toward a fresh slew of US economic indicators due next week, including consumer prices.

“The storm clouds have parted” for the time being for Asian markets, said Tony Sycamore, market analyst at IG Australia. “I think we drift higher now until we see another growth scare but Japan might be off the investor radar for a bit.”

It remains to be seen how long the latest rebound can last as investors continue to digest different signals from policymakers. For one, Federal Reserve Bank of Kansas City President Jeffrey Schmid indicated he’s not ready to support a reduction in interest rates with inflation above the target, according to comments made on Thursday in the US.

Swap traders further trimmed bets on aggressive Fed easing in 2024. The global repricing has been so sharp that at one point interest-rate swaps implied a 60% chance of an emergency rate cut by the Fed in the coming week — well before its next scheduled meeting in September. Current pricing suggests about 40 basis points of cuts for September.

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

The yen turned flat against the dollar after weakening for three days.

Oil rose slightly following a Thursday rally, against the backdrop of simmering tensions in the Middle East. Gold slid.

Meanwhile, steel and aluminum producers in Canada were urging Prime Minister Justin Trudeau’s government to swiftly impose new tariffs on Chinese products, saying metals from the Asian powerhouse are flooding the Canadian market and threatening local jobs.

Key events this week:

• Germany CPI

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.2% as of 1:15 p.m. Tokyo time

• Nasdaq 100 futures rose 0.3%

• Japan’s Topix rose 1%

• Australia’s S&P/ASX 200 rose 1.3%

• Hong Kong’s Hang Seng rose 1.8%

• The Shanghai Composite rose 0.1%

• Euro Stoxx 50 futures rose 0.4%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%

• The euro was little changed at $1.0922

• The Japanese yen was little changed at 147.16 per dollar

• The offshore yuan rose 0.2% to 7.1664 per dollar

Cryptocurrencies

• Bitcoin rose 2.8% to $61,211.98

• Ether rose 4.7% to $2,692.46

Bonds

Commodities

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

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

This story was produced with the assistance of Bloomberg Automation.

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