Asian stocks should get off to a stable start on Friday after cyclical factors pushed Wall Street to a record high and the dollar fell ahead of a US employment report that will shape the outlook for Federal Reserve monetary policy.
Futures for Japan and Australia rose but fell for Hong Kong. US equity contracts volatile after energy and industrial stocks helped the S&P 500 make new highs. The US 10-year Treasury yield fell slightly and the dollar hit a four-week low.
The payroll report will color expectations about when the Fed might start reducing pandemic-era incentives and how long it can wait before raising interest rates. The US likely created 725,000 jobs in August – a more moderate pace compared to the previous two months, but stronger than the gains in early 2021.
Wall Street continued to break into record territory overnight. Credit:AP
In commodities, crude oil was close to $ 70 a barrel as bets were made that the market can pick up additional supply from OPEC + as the U.S. Gulf grapples with the effects of Hurricane Ida.
The payroll report is another potential test of the prevailing calm in financial markets, which so far have weathered risks of economic reopening from coronavirus variants and the prospect of a less expansive monetary policy.
“Most market watchers don’t expect the US Federal Reserve to announce its taper plans at its November meeting at the earliest, as of now there are three full Non-Farm Payroll (NFP) reports,” said Matt Weller, Forex global director of research . com and City Index, in a notice to customers.
“Even so, traders will still be entering Friday’s big job report to see if the job market recovers as expected.”
In recent comments from Fed officials, Atlanta President Raphael Bostic said “we will keep the economy going until we see signs of inflation” before raising interest rates.
Meanwhile, strategists at Goldman Sachs Group said concerns about economic growth are exaggerated, paving the way for potential gains in cyclical assets in the near future.
Traders continue to follow the political debate over planned US financial spending. Senator Joe Manchin is calling for a “strategic break” in President Joe Biden’s economic agenda that may jeopardize the $ 3.5 trillion tax and spending package.