Asian shares saw gains as a slowdown in the US labor market fueled speculation that the Federal Reserve would implement interest rate cuts next year to stave off a potential recession. Japanese stocks experienced their most significant increase in a month, with Australia, South Korea, and Hong Kong also witnessing advances. Meanwhile, US and European stock futures edged higher following a relatively unchanged closing for the S&P 500.
China took steps to support the yuan’s value through the daily reference rate, aiming to boost market sentiment. This move followed Moody’s Investors Service lowering its credit outlook for China, contributing to a brief downturn in the onshore yuan.
Despite Tuesday’s drop, benchmark US 10-year yields rebounded from below 4.2%. Yields on Australian, New Zealand, and Japanese bonds retreated in response to this overnight shift.
The October Job Openings and Labor Turnover Survey (JOLTS) in the US, falling below all estimates, hinted at a cooling labor market. Analysts see this as reinforcing the belief that the Fed’s tightening trajectory may be put on hold, with attention turning to next week’s Federal Open Market Committee (FOMC) meeting.
Hebe Chen, an analyst at IG Markets Ltd. in Melbourne, noted, “Additional signs of a cooling labor market solidify the notion that the Fed’s tightening trajectory been relegated to the history books.” The upcoming FOMC meeting is anticipated as a pivotal event.
The Australian dollar emerged as one of the top-performing currencies in the Asia-Pacific region, responding to unexpected economic slowing in the country during Q3. The US dollar steadied after two consecutive days of gains.
Treasuries joined the global bond rally following remarks from one of the European Central Bank’s hawkish officials, signaling a remarkable slowdown in inflation. Investors now speculate that Europe may lead major central banks in implementing interest rate cuts.
Bitcoin extended its rally for the seventh consecutive day, trading above $44,000.
Looking ahead, the focus shifts to various economic events, including Eurozone retail sales, Germany factory orders, US ADP private payrolls, and the Bank of Canada monetary policy meeting.
Key Market Moves:
- S&P 500 futures rose 0.2%.
- Nasdaq 100 futures rose 0.4%.
- Japan’s Topix rose 1.5%.
- Australia’s S&P/ASX 200 rose 1.4%.
- Hong Kong’s Hang Seng rose 0.5%.
- China’s Shanghai Composite was little changed.
- Euro Stoxx 50 futures rose 0.3%.
Currency and Commodity Movements:
- The Bloomberg Dollar Spot Index was little changed.
- Bitcoin was little changed at $43,888.65.
- Ether rose 0.8% to $2,291.9.
- West Texas Intermediate crude rose 0.2% to $72.48 a barrel.
- Spot gold was little changed.
Bond Yields:
- The yield on 10-year Treasuries advanced three basis points to 4.19%.
- Japan’s 10-year yield declined 3.5 basis points to 0.630%.
- Australia’s 10-year yield declined 11 basis points to 4.30%.
