Hong Kong, Tokyo, Seoul, Sydney, Singapore, Taipei, Wellington, Manila and Jakarta all gained, though Shanghai slipped
Asian markets mostly rose on Tuesday after a rally on Wall Street as traders try to assess the outlook for US interest rates following last week’s disappointing jobs report, with focus on the release of key inflation data.
With last Friday’s non-farm payrolls showing that the labour market slowing faster than expected, there is a growing concern that the country’s economy is heading for a recession, which sent stocks down.
While the Fed is widely expected to reduce rates at next week’s meeting, debate surrounds whether it will be 25 or 50 bps, with some arguing that going for the bigger option could suggest that decision-makers are worried.
Analyst Stephen Innes said there were numerous factors that could sway nervous investors ahead of the Federal Reserve’s decision.
Wednesday’s CPI is the first major release, and a big miss to the downside could ramp up bets on a 50-point reduction but add to concerns about the economy.
While the labour market is cooling, it’s far from frozen, and second-quarter GDP was revised up to a solid 3% annualised gain, keeping the soft-landing narrative firmly on the table, he wrote in his Dark Side Of The Boom newsletter.
Still, he said: For now, the Federal Reserve likely won’t feel the need to hit the panic button with a jumbo rate cut, but stock traders have not fully grasped the depth of the potential labour market weakness yet.
That leaves the door open for further, potentially sizeable market corrections. Expect the worry meter to creep higher if the employment picture deteriorates further, he added.
All three main indices on Wall Street gained more than 1% on Monday after last Friday’s sharp, tech-led pull back.
In early trade on Tuesday, Hong Kong, Tokyo, Seoul, Sydney, Singapore, Taipei, Wellington, Manila and Jakarta all gained, though Shanghai slipped.
