The US government will release a report detailing the number of jobs added by employers in the previous month, a highly anticipated economic update
Asian shares saw gains today as investors awaited the US jobs report, with markets in Tokyo and Shanghai closed for public holidays.
Oil prices and US futures also climbed. The Japanese yen showed signs of strengthening against the US dollar, hinting at significant central bank intervention to curb the dollar’s rise.
According to the financial newspaper Nihon Keizai Shimbun, Japan’s government is believed to have spent around 8trillion yen (about $50billion) this week to prevent the yen from weakening further against the dollar. This intervention comes as the weaker yen has been pushing up the cost of imports, contributing to the Bank of Japan’s decision to abandon its negative interest rate policy and increase its benchmark rate to between zero and 0.1%, up from a long-standing level of minus 0.1%.
Marcel Thieliant of Capital Economics suggests that rates could rise even more, despite not reaching the bank’s 2% inflation target. “Even though the economic case for preventing the yen from sliding is much weaker, the Ministry of Finance seems to have responded with an even more forceful round of foreign exchange interventions this week than it did two years ago,” commented Mr Thieliant.
While a weak yen can be beneficial for Japanese companies that generate a large portion of their revenue overseas, significant fluctuations in the foreign exchange market can disrupt corporate planning. Additionally, a significantly weaker yen can increase the cost of importing essential commodities like oil.
On Friday morning, the dollar was trading at 153.15, down from 153.65 late on Thursday. The euro saw an increase, rising to $1.0735 from $1.0727. In other parts of Asia, Hong Kong’s Hang Seng surged by 1.7% to 18,518.64, mirroring gains on Wall Street. News of new initiatives by Chinese leaders to stimulate the economy spurred the purchase of technology shares.
E-commerce giant Alibaba saw a rise of 3.9%, and its competitor JD.com increased by 5%. Baidu also saw a boost, with a rise of 4.2%. Australia’s S&P/ASX 200 rose by 0.6% to 7,629.00, while Seoul’s Kospi fell slightly by 0.3% to 2,676.63. Taiwan’s Taiex experienced a modest increase of 0.5%.
India’s Sensex dropped by 0.9% to 73,952.37. On Thursday, the S&P 500 increased by 0.9% to 5,064.20, following a day of significant fluctuation after the Federal Reserve announced it would likely delay cuts to interest rates but had no plans to raise them. This announcement more than halved its drop for the week.
The Dow Jones Industrial Average also rose by 0.9% to 38,225.66, and the Nasdaq composite jumped 1.5%, to 15,840.96. On Friday, the US government will release a report detailing the number of jobs added by employers in the previous month, a highly anticipated monthly economic update.
Economists are predicting this report will show a slowdown in hiring. A report released on Thursday revealed that the number of US workers applying for unemployment benefits last week was lower than economists had predicted, indicating strength in the labour market despite heightened interest rates.
In a potentially concerning revelation, a separate report suggested that the growth of US worker productivity in early 2024 has fallen below economists’ forecasts. Furthermore, a measurement which compares labour costs to productivity exceeded predictions in the preliminary report, hinting at possible inflationary pressure.
Before its profit announcement, which was made after trading concluded on Thursday, Apple’s shares climbed by 2.2%. DoorDash’s stocks dipped by 10.3% following an announcement of greater losses than anticipated. Conversely, Peloton Interactive’s stocks vacillated from a small gain to a 2.8% loss after it disclosed plans to cut approximately 400 jobs as part of a scheme aiming to save $200million annually.
The company also revealed that its chief executive, Barry McCarthy, will be stepping down, following the share price hitting an all-time low last week. The US economy finds itself precariously balanced- strong enough to steer clear of a potential recession but not overly robust to exacerbate present concerns about inflation.
Persistent high inflation readings this year have prompted Federal Reserve Chair Jerome Powell to state on Wednesday that achieving sufficient confidence surrounding inflation to facilitate an interest rate cut will likely require “longer than previously expected”.
In energy trading, US benchmark crude oil gained 17 cents to $79.12 per barrel in electronic trading on the New York Mercantile Exchange. It lost 5 cents on Thursday. Brent crude, the international standard, added 18 cents to $83.85 per barrel.
