Asia Shares Reach Seven-Month High Ahead of US Jobs Data

117

Asian stocks surged to a seven-month high on Friday, in line with global markets, as investors welcomed the possibility of central banks easing rates. This sentiment kept the dollar and Treasury yields subdued.

While most Asian markets rose, Japan stood out as the Bank of Japan (BOJ) is speculated to exit negative interest rates soon. This anticipation lifted the yen and pushed domestic bond yields higher.

MSCI’s broadest index of Asia-Pacific shares outside Japan hit 538.47 points, its highest level since August, with a 1% increase. Global stocks rallied to record highs previously after hints of a potential rate cut from the European Central Bank (ECB) and Federal Reserve Chair Jerome Powell’s similar stance on US rates.

Vishnu Varathan, chief economist for Asia ex-Japan at Mizuho Bank, noted the market’s positive response to Powell’s comments, interpreting them as an invitation for rate cuts.

Amid these developments, the two-year US Treasury yield fell to a one-month low, indicating expectations of Fed rate cuts.

Investors are now focused on the upcoming nonfarm payrolls report for insights into the US rate outlook, following January’s surprising job report.

Concerning currency markets, the dollar weakened, touching a two-month low against the euro, while the yen strengthened against the dollar, backed by speculation about the BOJ’s policy shift.

Chinese stocks opened strong, with blue chips rising 0.4% and the Shanghai Composite Index gaining 0.25%, despite concerns about the lack of stimulus details from Beijing during the annual parliament session.

In commodities, Brent crude rose to $83.27 a barrel, and US crude gained to $79.33 per barrel. Spot gold dipped slightly to $2,157 an ounce after touching an all-time high in the previous session, driven by expectations of an easing cycle by the Fed.