Stocks rise faster than US jobs data

  • Asian equities for third week of gains in a row
  • Taiwan leads Asian gains; US European stock futures up
  • Treasury yield curve remains sharply inverted
  • Oil is nearing six-month lows

HONG KONG, Aug. 5 (Reuters) – Asian stocks gained Friday ahead of US jobs data that will provide another clue to the health of the world’s largest economy, as warning signals flashed in bond markets and oil traded near its lowest level since last year. start of the war in Ukraine.

MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) rose 0.74%, boosted by index heavyweight TSMC (2330.TW), which rose 3.2% and regained ground it had lost earlier this week due to tensions surrounding the US House of Representatives Speaker Nancy Pelosi’s visit to Taiwan.

As a result, the regional index ended positive for the third week in a row, while Japan’s Nikkei (.N225) gained 0.83%.

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EUROSTOXX 50 futures and S&P 500 futures both gained 0.2%.

But the main event of the day, the US employment data, is yet to come, with investors waiting to see if the aggressive pace of US Federal Reserve rate hikes begins to slow economic growth.

Nonfarm payrolls are expected to grow by 250,000 jobs last month, following a 372,000 job increase in June.

Last week, stocks and US Treasuries rose as markets decided the Fed might raise interest rates less aggressively on fears of a recession and hopes of slowing inflation, although many Fed policymakers have backtracked on such suggestions this week.

“We are waiting for a slowdown in the labor market, so if we get a big miss, it will finally confirm that the labor market is slowing, and we will see some more rallies in US treasuries,” said Prashant Bhayani, Asia’s chief investment officer for Asia. BNP Paribas Wealth Management.

Other asset classes are already pointing to a slowdown.

“The bond market says there is a pretty high probability of a recession, while the stock market is focused on the labor data,” Bhayani said.

The closely watched portion of the US Treasury yield curve that measures the difference between two- and 10-year Treasury yields reached 39.2 basis points overnight, the deepest inversion since 2000.

An inverted curve is often seen as a harbinger of a recession.

On Friday morning, the 10-year yield was 2.6936% and the 2-year yield was 3.0531%, leaving the difference between them still a large 36 basis points.

Another sign that growth could be slowing, oil closed overnight at its lowest level since February, before the war in Ukraine.

“Crude oil fell sharply as recession fears fueled concerns about weaker demand,” ANZ analysts said, with declines also due in part to data on Wednesday that showed a sharp rise in US inventories last week. read more

Prices recovered in Asian trading Friday, Benchmark Brent oil futures rose 0.5% at $94.61 a barrel and US crude oil futures were 0.7% higher at $89.12 a barrel.

In currency markets, the dollar index, which measures the greenback against six major counterparts, stood at 105.93, a fraction higher after falling 0.6% overnight alongside falling US interest rates.

Sterling fell a whisker against the dollar at $1,2142 after taking an overnight turn as the Bank of England raised interest rates and warned a long recession was approaching Britain. read more

Spot gold held steady at $1,790 an ounce.

(This story corrects the headline to remove redundant words)

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Editing by Stephen Coates

Our Standards: The Thomson Reuters Trust Principles.

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