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Asian stocks track Wall Street gains ahead of US payrolls data

Japan’s Nikkei index rose 1.23% to 26,817.24 in morning trade, its highest mark since June 29. ―Reuters peak

Friday 08 July 2022 11:49 MYT

TOKYO, July 8 ― Asian stocks followed Wall Street’s gains overnight in early trading today as fears of an economic slowdown eased and the pound began to recover its recent losses following British Prime Minister Boris Johnson’s decision to resign.

Japan’s Nikkei index rose 1.23% to 26,817.24 in morning trade, its highest level since June 29.

MSCI’s broadest index of Asia-Pacific stocks outside Japan gained 0.8% to its highest level in a week, and South Korea’s KOSPI index rose 1.18% and rose 0.8% to its highest level in a week. set for its best week in five months.

All three major U.S. indexes made overnight gains on positive signals from Federal Reserve officials. Gov. Christopher Waller called recession fears “overblown,” while St. Louis Fed Bank President James Bullard said he saw a “good chance” of a soft landing for the economy.

Waller suggested the Fed would likely try to fight inflation with an interest rate hike of 75 basis points in July and a 50 basis point hike in September. Although he said, “if inflation just doesn’t seem to be coming down, we need to do more,” allowing for possible future hikes of 25 basis points.

This brought relief to equity markets after recent sell-offs caused by fears that global central banks were pushing economies into recession to curb runaway inflation. The Asian regional benchmark is still down 16% since the start of the year.

The latest indicator of the health of the US economy is expected later today with the release of US nonfarm payrolls data. The consensus expects 268,000 jobs to have been added in May.

“How the market will react to deviations from this expectation is debatable,” ING’s Robert Carnell and Iris Pang said in a client note. “You could say that a higher number will mean the Fed has more work to do, and thus increases the prospects of a harder landing. But sometimes the market reaction is more simplistic than you might imagine.

The pound rose 0.22% to 1.20530 and is now essentially back to where it was at the start of the week after experiencing a few rough days amid political unrest in Britain.

“In our view, the pound should soon lose its gains given the prospect of a weaker UK economy,” said Carol Kong, currency strategist at Commonwealth Bank of Australia.

Oil prices were down in morning trade after rebounding overnight. Brent crude futures fell 34 cents to US$104.33 (RM461.74) a barrel, while US WTI crude CLc1 fell 39 cents to US$102.34.

US Treasury yields were flat, with the benchmark 10-year yield at 2.9982% and the two-year yield at 3.0182%.

Bitcoin jumped 3.03% to hit US$22,268.55, its highest price in more than three weeks. It’s up nearly 15% this week, heading for its best week since early May. ― Reuters