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Stocks increase before U.S. jobs data

Image: Reuters Berita 24 English - As cautionary signals appeared in the bond market and oil traded around its lowest level since the start ...


Image: Reuters

Berita 24 English - As cautionary signals appeared in the bond market and oil traded around its lowest level since the start of the Ukrainian conflict, Asian shares rose on Friday ahead of U.S. jobs data that will provide another indicator of the health of the world's largest economy.

With the help of index heavyweight TSMC, which increased 3.2 percent, MSCI's broadest index of Asia-Pacific shares outside of Japan gained 0.74 percent, making up ground it had earlier in the week lost as a result of unrest surrounding U.S. House of Representatives Speaker Nancy Pelosi's trip to Taiwan.

As a result, the regional index is expected to end the week in positive territory for the third consecutive week, while Japan's Nikkei rose 0.83 percent.

Both the S&P 500 futures and the EUROSTOXX 50 futures saw gains of 0.2 percent.

The day's main event, the U.S. employment report, is still to come as investors wait to see if the U.S. Federal Reserve's rapid rate hike programme is beginning to limit economic growth.

After rising by 372,000 jobs in June, nonfarm payrolls are anticipated to rise by 250,000 jobs last month.

Due to concerns about a recession and hopes that inflation would be slowed, markets last week believed the Fed may hike rates less aggressively. However, many Fed policy makers have resisted such proposals this week.

According to Prashant Bhayani, chief investment officer for Asia at BNP Paribas Wealth Management, "we're waiting to see a slowdown in the labour market, so if we get a huge miss, it would finally prove the labour market is slowing, and we'll see some more rallies in U.S. treasuries."

Already, several asset types are showing signs of slowing down.

The equities market is focused on the labour data, whereas the bond market indicates that there is a fairly strong likelihood of a recession, according to Bhayani.

The difference between the yields on two-year Treasury notes and 10-year Treasury notes, which is a key indicator of the U.S. Treasury yield curve, reached 39.2 basis points overnight, the greatest inversion since 2000.

An inverted curve is frequently thought to herald a coming recession.

The difference between the 10-year yield and the two-year yield on Friday morning was still a sizable 36 basis points. The 10-year yield was 2.6936 percent and the two-year yield was 3.0531 percent.

Oil ended tonight at its lowest levels since February, prior to the Ukraine War, which is another indication that growth may be stalling.

According to analysts at ANZ, "Crude oil fell substantially as recessionary fears fuelled concerns of reduced demand." Declines were also partially attributed to data released on Wednesday that showed a spike in U.S. stocks the previous week.

In Friday's Asian trading, prices slightly increased, according to Benchmark. U.S. crude futures were 0.7 percent higher at $89.12 per barrel while Brent crude futures were up 0.5 percent at $94.61 per barrel.

The dollar index, which compares the value of the dollar to six important rivals, was up slightly on currency exchange markets at 105.93 after sliding 0.6 percent overnight along with declining US rates.

After spiking overnight as the Bank of England hiked interest rates and issued a warning that a protracted recession was coming to Britain, the pound was down a hair against the dollar at $1.2142.

Gold's current spot price was $1,790 per ounce.


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