Stock Rebound Loses Steam, Yen Erases Gains – Asia Market Wrap

As traders anticipated this week’s US payrolls report to determine the amount of the Federal Reserve’s easing, Asian equities pared their gains and US stock futures declined.

Most of the 0.8% gain was wiped by the MSCI Asia Pacific Index. Over 1% of the value of the Nikkei 225 index in Japan was lost, and benchmarks in South Korea and Hong Kong also declined. Chipmaker stock prices rose sharply, driving a more than 1% increase in Taiwan’s Taiex index.

Treasury yields increased following the 10-year rate’s eight basis point decline in the previous session, as expectations of a sharp reduction in Fed interest rates were reinforced by the US labour market’s slowdown. A measure of the strength of the dollar steadied after declining by 0.3% on Wednesday. Gains were reversed by the yen, which was previously bolstered by a rise in Japan’s real wages.

Ahead of the US payroll report, which is expected on Friday and is one of the key data points before the Fed’s decision later this month, traders are once again in a wait-and-see attitude. Since attention has shifted to the possibility of a recession, financial markets have shown disproportionate reactions to US economic data. Risk assets have also been negatively impacted by scepticism over the artificial intelligence hype, as evidenced by Nvidia’s worst two-day decline since October 2022.