By Stella Qiu
SYDNEY (Reuters) – Asian stocks remained range-bound and the dollar suffered losses on Friday as investors were on edge ahead of U.S. jobs data that could determine the depth and speed of future rate cuts in the world’s largest economy.
Right now, oil prices are facing their worst week in over a year, hovering just above a critical level on the chart, with their near-term fate hanging on the jobs report due later today. [O/R]
MSCI’s Asia Pacific ex-Japan stock index rose 0.2 percent, after falling 2.3 percent so far this week. The Nikkei slipped 0.1 percent to drop 3.9 percent for the week.
Chinese stock markets opened mixed, while Hong Kong’s Hang Seng was flat.
However, market jitters sent Nasdaq futures down 0.6%, while S&P futures slipped 0.3%.
The Japanese yen is vulnerable to a sharp decline after its 2% rally this week and was up 0.1% at 143.27 per dollar.
Much is riding on the U.S. nonfarm payrolls report after Federal Reserve Chairman Jerome Powell said policymakers were not supportive of further weakening in the labor market, laying the groundwork for a rate cut in September.
Analysts expect an increase of 165,000 new jobs and a drop in the unemployment rate to 4.2%.
However, risks are now tilted to the downside after weak job openings and declining private sector job creation led markets to raise the odds of a half-point Fed rate cut to 42% this month.
Influential Fed Governor Christopher Waller and New York Fed President John Williams will speak after the jobs data is released, giving the market a near-instant reaction.
ING analysts believe that even if job creation is in line with expectations, markets could still discount the possibility of a 50 basis point cut.
“We think the market is actually positioned for a sub-100,000 number. If we don’t get that kind of validation of the material slowdown, yields will be under pressure to move a little bit higher,” said Padhraic Garvey, regional head of research for the Americas at ING.
Bonds rallied early in the week, though gains could quickly reverse based on payroll data. Two-year Treasury yields have fallen 17 basis points since the start of the week to 3.7520%, their lowest level since early 2023.
Ten-year yields fell 18bps to 3.7330%, with the two-year spread on the verge of turning positive.
Oil is facing its worst week since October 2023 as demand concerns weigh on a major drawdown of U.S. inventories and a delay in output increases by OPEC+ producers. [O/R]
Supply issues have failed to spur a rise in crude prices. Brent crude futures steadied on Friday, up 0.2% at $72.8 a barrel, but are down 7.6% since the start of the week.
They were stuck near a key range of $70-71, a break of which would open the way to levels not seen since late 2021.
Gold held steady at $2,514 an ounce, just below its record high.
In deal news, Japanese retail giant Seven & i Holdings said Friday it had rejected a $38.5 billion cash offer from Canadian Alimentation Couche-Tard…
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