Asian stocks surged to record levels on Thursday, with the US dollar firming against most currencies, sans yen, after a surprisingly strong US jobs report dampened near-term rate cut expectations.
Markets in South Korea and Japan hit all-time peaks, as the technology sector drove MSCI’s broadest index of Asia-Pacific shares up 0.7 per cent, marking a 13 per cent gain in the past six weeks.
Besides, Japanese shares rallied after Prime Minister Sanae Takaichi’s election win, with hopes that her economic stimulus policies would continue.
The yen firmed by 2.7 per cent to 153.01 per dollar this week, bolstered by optimism that Takaichi will be fiscally responsible after her victory.
Meanwhile, European futures pointed to a strong opening as investors evaluated the region’s corporate health amid the ongoing earnings season.
Investor focus turned to a slew of US economic reports.
That includes one on Wednesday that indicated acceleration in job growth and a slight dip in unemployment, suggesting labour market stability that could lead the Federal Reserve to hold rates steady in the near term.
Thomas Mathews, head of markets for Asia-Pacific at Capital Economics, said that if labour market conditions are tightening, investors may be overestimating the case for further easing, which could lead to more pain for treasuries.
Market expectations for a Fed rate cut rose to about 20 per cent before the jobs data, but dropped to 5 per cent after, with traders pricing in at least two rate cuts this year.
The two-year US treasury yield was at 3.505 per cent, jumping 5.8 basis points in its largest one-day gain since late October, the data showed.
The higher yields supported the under-pressure dollar, which rebounded against most currencies, though analysts say the greenback needs more positive data surprises to sustain recovery.
The yen stood as an outlier amid the US dollar’s strength, continuing its rally in the wake of Takaichi’s win.
In commodities, oil prices extended their gains, as escalating tensions between Iran and the US raised concerns, the data showed.
Brent crude oil futures rose 0.4 per cent to $69.70 per barrel, while the US West Texas Intermediate crude rose 0.46 per cent to $64.93.
On the other hand, spot gold dipped 0.44 per cent to about $5,059 after rising by more than 1 per cent in the previous session.
