The Asian market remained cautious on Friday as investors awaited the release of the U.S. jobs data, which would potentially influence the Federal Reserve’s decision on interest rate cuts. The dollar struggled while Asian shares held steady, with oil prices facing their worst week in over a year. The outcome of the jobs report was expected to determine the magnitude and pace of rate adjustments in the United States.
Asian shares outside Japan saw a slight increase of 0.2%, following a 2.3% decline earlier in the week. The Nikkei experienced a 0.1% drop, totaling a 3.9% decrease for the week. Meanwhile, China’s stock markets showed mixed results and Hong Kong’s Hang Seng remained unchanged. Market sentiment was reflected in the Nasdaq futures falling by 0.6% and S&P futures sliding by 0.3%.
The Japanese yen, which surged by 2% during the week, was vulnerable to a corrective downturn and remained 0.1% higher against the dollar. Analysts were closely observing the U.S. non-farm payrolls report for indications on the labor market’s health, as Federal Reserve Chair Jerome Powell had hinted at a potential rate cut in September. Expectations were for 165,000 new jobs and a reduction in the unemployment rate to 4.2%.
Despite the market forecast aligning with expectations, the prospect of a 50 basis point rate cut was heightened to 42% due to recent soft job figures. Investors were anticipating reactions from Federal Reserve governors Christopher Waller and John Williams post-release of the data. Any deviations from expectations could lead to fluctuations in bond yields, which had seen a decline earlier in the week.
Oil prices were at a critical juncture, with demand concerns overshadowing supply constraints. The week saw a significant decline in oil prices, with Brent crude futures settling at $72.8 per barrel, marking a 7.6% decrease. Gold remained stable at $2,514 an ounce, close to its historical peak. Additionally, Japanese retailer Seven & i Holdings rejected a multi-billion dollar bid from a Canadian conglomerate, citing shareholder interests.
Overall, the Asian markets were in a state of flux as they awaited the U.S. jobs report to gauge the economic trajectory. The interplay between market indicators and geopolitical factors would continue to shape investor sentiment in the coming weeks.