Asian investors on Wednesday tracked a rally on Wall Street after a softer-than-expected report on US job openings soothed fears the Federal Reserve will hike interest rates again.
The mood was brightened by a report that China's biggest state-backed banks would slash rates on mortgages and deposits as part of a drive to support the country's beleaguered property sector.
Wall Street enjoyed one of its best days in months thanks to a surge in big names -- including Amazon and Apple -- after the Labor Department's closely followed Job Openings and Labor Turnover Summary (JOLTS) figure fell well short of forecasts.
A separate report revealed consumer confidence falling owing to concerns about jobs, higher rates and lingering inflation.
The readings come ahead of the release of the Fed's preferred gauge of inflation -- the personal consumption expenditures price index -- this week as well as data on non-farm payrolls and factory activity.
Analysts said the JOLTS reading would give monetary policymakers room to hold off on lifting borrowing costs further, having already pushed them to a two-decade high to tame prices.
The cooling of rate expectations helped bring US Treasury yields down and even allowed investors to bring forward bets on a rate cut to June from July, according to Bloomberg News.
"With layoffs estimated to be 8.8 million, it is still around 70 percent above its long-term average, but markets don't care about that," said Matthew Simpson at City Index.
"It's the rate of change that matters. And with job openings falling to a 28-month low, it suggests the labour market is indeed softening
"And with markets ready to pounce on softer US data, any signs of weakness is likely to weigh further on yields and the US dollar. And that could be great for equity market sentiment."
Tokyo, Sydney, Seoul, Mumbai, Bangkok, Taipei, Manila and Jakarta were all up. Hong Kong and Shanghai were flat.
London, Paris and Frankfurt all rose in the morning.
The gains extended a rally across world markets this week that came after Fed chief Jerome Powell last week repeated a pledge that rate decision-making would be based on incoming data, which has been broadly going in the right direction in recent months.
However, Stephen Innes at SPI Asset Management warned that while poor data was seen as good for the outlook on rates, "we are only one bad (non-farm payrolls) report from hitting the 'bad news is bad' button".
"The emergence of weak labour market data of this magnitude has reignited concerns of a potential US recession, which is not great for risk markets."
Investors took heart from a Bloomberg article that said lenders were looking to slash rates on most of China's $5.3 trillion of outstanding mortgages.
While the report said the move would only affect loans on first homes, it indicated authorities were trying to relieve some of the pressure in the vast property industry, where a debt crisis is threatening some of the nation's biggest developers and the wider financial system.
It also comes as leaders face calls to introduce a "bazooka" stimulus for the world's number two economy, with a series of pledges and small rate cuts doing little to ease anxiety among traders and causing foreign investors to flee.
Still, Larry Hu of Macquarie Group said: "This is an incremental policy step, not a game-changer because people's confidence is still low.
"I think we're going to see property easing come through in the
coming weeks, I just don't know if it's going to be strong enough."
- Key figures around 0810 GMT -
Tokyo - Nikkei 225: UP 0.3 percent at 32,333.46 (close)
Hong Kong - Hang Seng Index: FLAT at 18,482.86 (close)
Shanghai - Composite: FLAT at 3,137.14 (close)
London - FTSE 100: UP 0.4 percent to 7,498.04
Dollar/yen: UP at 146.40 yen from 145.87 yen on Tuesday
Euro/dollar: DOWN at $1.0857 from $1.0884
Pound/dollar: DOWN at $1.2635 from $1.2644
Euro/pound: DOWN at 85.92 pence from 86.05 pence
West Texas Intermediate: UP 0.6 percent at $81.65 per barrel
Brent North Sea crude: UP 0.5 percent at $85.91 per barrel
New York - Dow: UP 0.9 percent at 34,852.67 (close)
Artificial Intelligence Analysis
Litany Layer: Asian investors tracked a rally on Wall Street after a softer than expected report on US job openings, China’s biggest state-backed banks would slash rates on mortgages and deposits, Wall Street enjoyed one of its best days in months, report revealed consumer confidence falling, Fed’s preferred gauge of inflation
personal consumption expenditures price index, readings come ahead of the release of the Feds preferred gauge of inflation, Job Openings and Labor Turnover Summary
JOLTS figure fell well short of forecasts, layoffs estimated to be 8.8 million, job openings falling to a 28 month low, rate expectations helped bring US Treasury yields down, investors bring forward bets on a rate cut to June, Tokyo, Sydney, Seoul, Mumbai, Bangkok, Taipei, Manila, and Jakart; equities extend gains on US jobs data.Myth/Metaphor Layer:
The market is like a roller coaster ride, with investors quickly reacting to even the slightest changes in data. The US job opening report was a signal that the economy may be slowing down, which suggested that the Fed may not raise interest rates further. This calmed investors fears, allowing the markets to rally and equities to extend their gains. The job market is still weak, but markets are responding to the rate of change. This could be a sign that investors are more optimistic about the future of the economy. All in all, investors are cautiously optimistic that the US economy could be on the mend.
JOLTS: The Job Openings and Labor Turnover
Summary
(JOLTS) is a report released by the U.S. Bureau of Labor Statistics. This report provides detailed information regarding job openings, hires, and separations. It's a way to gauge the health of the job market beyond the basic unemployment rate and payroll numbers. When job openings are high, it can indicate that businesses are growing and searching for workers. Conversely, a decline in job openings can suggest a cooling job market.
Asian investors are taking cues from the U.S. stock market which rallied after a softer than expected JOLTS report.
There seems to be economic policy changes in China with its state-backed banks cutting rates.
Wall Street had a positive day.
Consumer confidence is falling, which can have implications for spending and economic growth.
The "personal consumption expenditures price index" is mentioned as the Fed's preferred gauge of inflation. This metric is important because it can influence the Federal Reserve's monetary policy decisions.
The JOLTS figures were below expectations.
Layoffs were high and job openings hit a 28-month low.
As a result of these economic indicators, U.S. Treasury yields decreased. Yields often fall when investors expect slower economic growth or anticipate more accommodative monetary policy from the central bank.
There's speculation of a potential rate cut by the Federal Reserve in June.
Various Asian stock markets, including Tokyo, Sydney, Seoul, and others, responded positively to the U.S. job data.
The "Myth/Metaphor Layer" provides a more abstract interpretation:
The market is compared to a roller coaster, highlighting its volatility and the quick reactions of investors to new data.
The softer JOLTS report hinted at a potential economic slowdown. This may have led investors to believe that the Federal Reserve would not hike interest rates, which can be a positive sign for equities.
While the job market indicators are not particularly strong, the market's reaction suggests that investors might be looking at the rate of change and feeling hopeful about future economic prospects.
The overall sentiment seems to be one of cautious optimism regarding the U.S. economy's trajectory.
In essence, JOLTS provides a snapshot of the job market's health, and its data, along with other economic indicators, can influence investor sentiment and decisions in the stock market.
This AI report is generated by a sophisticated prompt to a ChatGPT API. Our editors clean text for presentation, but preserve AI thought for our collective observation. Please comment and ask questions about AI use by Spacedaily. We appreciate your support and contribution to better trade news.
