Asian stocks try to stabilize after global sell-off; focus on US data By Reuters

By Ankur Banerjee

SINGAPORE (Reuters) – Asian stock markets tried to regain their footing on Thursday after a sharp sell-off as a surge in government bonds weighed on the dollar and lifted the yen as U.S. economic worries grew the chances of the Federal Reserve cutting interest rates. .

Oil prices were steady in early trade after falling in earlier sessions on weak supply and demand issues, while gold rose. (GOL/) (O/R)

In a data-packed week, investors scrutinize emerging reports to assess the health of the US economy and labor market, with weak manufacturing data on Tuesday and mixed jobs data on Wednesday keeping markets on edge.

fell 0.5 percent to a three-week low, although shares in Taiwan and South Korea rose 1 percent after falling on Wednesday.

That helped MSCI’s broadest index of Asia-Pacific shares outside Japan rise 0.6 percent, after falling nearly 3 percent during a three-day losing streak.

Investors’ attention on Thursday will focus on a reading on the US services industry, with data on jobless claims. However, the main focus of the week will be on Friday’s highly anticipated August non-farm payrolls report.

The payrolls report is expected to provide the clearest indication of where the economy is headed and whether the Fed will cut interest rates this month by a quarter or half a percentage point.

Markets now peg a 44 percent chance the Fed will cut rates by 50 basis points at its Sept. 17-18 meeting, up from 38 percent a day earlier, CME’s FedWatch tool showed. Traders now anticipate 110 bps of easing this year from the Fed’s three remaining meetings.

The latest shift in market expectations comes after data released Wednesday showed U.S. job openings fell to a 3½-year low in July, suggesting the labor market is losing steam.

Ryan Brandham, head of global capital markets for North America at Validus Risk Management, said the data supports the Fed’s recent shift to focus on the employment side of its dual mandate.

“But that doesn’t change our view that the risks are tilted toward the Fed cutting less, not more, than the current market price.”

San Francisco Fed President Mary Daly said the Fed needs to cut interest rates to keep the labor market healthy, but now depends on incoming economic data to determine how much.

The chances of an economic contraction are now much lower than they were last year as the Fed appears poised to respond to any threats with deeper rate cuts if necessary, according to Vasu Menon, managing director of investment strategy at OCBC.

“What’s also happening with the US economy and the Fed is the weak financial conditions that should support the economy and allow the US central bank to cut rates gradually and steadily without panicking.”

In the currency market, the dollar remained on the defensive as investors fled risky assets in search of safety. The Japanese yen was one of the biggest gainers and was last at 143.56 per dollar, having already gained nearly 2% for the week so far.

The Swiss franc, also a traditional safe-haven currency, held steady at 0.8461 per dollar.

Treasury yields were calm in early Asian hours on Thursday after sinking in the previous session. (US/)

Two-year note yields were last at 3.775 percent after hitting 3.772 percent on Wednesday, the lowest since May 2023. Yields on the benchmark 10-year note were last at 3.767 percent.

Commodity futures rose 0.45% to $73.03 after falling 1.42% in the previous session. U.S. West Texas Intermediate crude futures rose 0.52 percent to $69.56, after falling 1.62 percent on Wednesday.