Stocks Advance Before US Jobs Data, Dollar Dips: Markets Wrap

(Bloomberg) -- A Wall Street stock rally extended into Asia as further signs of a cooling labor market reinforced bets that the Federal Reserve will cut interest rates this month.

Asian shares gained 0.7% while indexes in mainland China rebounded after a slump Thursday. Futures for the S&P 500 rose 0.2% after the gauge closed at a record high. Contracts also pointed to a stronger open for Europe. Japanese stocks advanced after President Donald Trump signed an executive order implementing his trade agreement with Japan.

Treasuries steadied after Thursday’s rally with the policy-sensitive US two-year yield hovering near a one-year low. Money markets are almost fully pricing in a Fed cut and see at least two by year-end. The dollar slipped against Group-of-10 peers, while gold headed for a third weekly gain.

The action reflected the latest readings on hiring and unemployment claims before Friday’s jobs data, which is expected to extend the weakest stretch of US job growth since the pandemic. Slowing demand, rising costs and Trump’s unpredictable trade policies have cooled hiring, adding pressure on the Fed to shore up the labor market.

“Many investors are clearly hoping for rate cuts, but it is important to remember to be careful what we wish for,” said Steve Sosnick at Interactive Brokers. “Data that show a gently decelerating but not dire labor market would suit that goal. Plunging data might bias the Fed to further cuts, but could also raise concerns that the central bank is too far behind the curve.”

Elsewhere, Trump signed an executive order implementing his trade agreement with Japan, under which the US will impose a maximum 15% tariff on most of its products.

The deal, including a promise that Japan will create a $550 billion US investment fund, was reached in July, but had yet to be formalized as Washington and Tokyo haggled over its terms. 

Japan’s top trade negotiator, Ryosei Akazawa, who was in Washington this week for talks, met with Trump on Thursday, according to a US official.

Meanwhile, Trump said he would be imposing tariffs on semiconductor imports “very shortly” but spare goods from companies like Apple Inc. that have pledged to boost their US investments.

In China, the CSI 300 Index rose almost 1% on Friday after the gauge slid 2.1% in the previous session following a report that financial regulators are considering a number of cooling measures after the market’s blistering 10% rally in August.

Traders are now positioning themselves for the key US jobs reading. Consensus forecasts peg nonfarm payrolls having grown 75,000 in August, which would mark a fourth straight month of job growth below 100,000. The unemployment rate is seen rising to 4.3% — the highest level since 2021. 

What Bloomberg’s Strategists Say...

“Bond markets have shrugged off their recent woes to shift focus to Friday’s US jobs data, although it will need to strike the right balance to keep this rally going. A sharp slowdown would revive recession worries, while a robust print could still spell trouble by slowing the pace of easing and fueling political pressure on the Fed. All while fiscal sustainability concerns and stagflation risks linger.”

— Mary Nicola, Markets Live strategist. Click here for the full analysis.

In the run-up to the data, figures showed US jobless claims rose to the highest since June. Private-sector payrolls increased by 54,000, according to ADP Research data, missing estimates. Hiring plans fell to the weakest level for any August on record, according to Challenger, Gray & Christmas.

“The Federal Reserve’s free pass on the labor market has ended,” said Jamie Cox at Harris Financial Group. “You can expect the Fed to tilt its balance of risks to cut rates in September.”

Lackluster employment figures released after the July meeting have prompted greater concern, and Fed Chair Jerome Powell recently signaled a rate cut could be warranted, citing a “shifting balance of risks.”

In commodities, oil fell for a third day, heading for a weekly decline ahead of an OPEC+ meeting that may see the group sign off on another supply hike. 

Corporate News:

• Broadcom Inc. Chief Executive Officer Hock Tan told investors that the chipmaker’s artificial intelligence outlook will improve “significantly” in fiscal 2026, helping allay concerns about slowing growth. The company is helping OpenAI design and produce an artificial intelligence accelerator from 2026, getting into a lucrative sphere dominated by Nvidia Corp.
• Samsung Electronics Co. unveiled a $650 version of its premium S25 smartphone and a pair of new tablets, the latest effort to roll out artificial intelligence features across its hardware lineup.
• A Hanwha Ocean Co. affiliate sold its stake in the South Korean shipbuilder, raising about 1.4 trillion won ($1 billion), after the company’s shares more than tripled over the past year.

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.2% as of 1:28 p.m. Tokyo time
• Japan’s Topix rose 0.5%
• Australia’s S&P/ASX 200 rose 0.4%
• Hong Kong’s Hang Seng rose 0.6%
• The Shanghai Composite rose 0.3%
• Euro Stoxx 50 futures rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%
• The euro rose 0.2% to $1.1669
• The Japanese yen rose 0.2% to 148.22 per dollar
• The offshore yuan rose 0.1% to 7.1316 per dollar

Cryptocurrencies

• Bitcoin rose 0.8% to $111,272.04
• Ether rose 0.3% to $4,320.77

Bonds

• The yield on 10-year Treasuries was little changed at 4.15%
• Japan’s 10-year yield declined two basis points to 1.570%
• Australia’s 10-year yield was little changed at 4.35%

Commodities

• West Texas Intermediate crude fell 0.2% to $63.35 a barrel
• Spot gold rose 0.3% to $3,557.67 an ounce

This story was produced with the assistance of Bloomberg Automation.

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