Asian shares wait for U.S. jobs data as oil rises on Middle East risk
Asian shares held their breath on Friday for U.S. jobs data that could prove pivotal for next month's interest-rate decision by the Federal Reserve, while rising oil prices served as a reminder that Middle East tensions remain far from resolved.
MSCI's broadest index of Asia-Pacific shares outside Japan .MISX00000PUS held flat and was down 0.4% for the week. Japan's Nikkei .N225 dropped 0.9% although it was set for a weekly rise of 1.2%.
South Korea's KOSPI .KS11 slipped 0.5% and was down 5.0% for the week for a seventh straight week of declines. The index had doubled in the first half of the year, swept up by the blistering demand for AI-linked chip stocks. China's CSI 300 .CSI300 rose 0.2%.
After bouts of volatility sparked by concerns over the durability of the AI-driven rally, investors are now squarely focused on the U.S. payrolls report due later in the day, which could prove crucial for the interest-rate outlook. Forecasts are centred on a rise of 80,000 jobs for July after a 57,000 gain in June, with the unemployment rate forecast to hold steady at 4.2%.
The stakes are high as markets cannot seem to make up their mind about how the Federal Reserve might move next month, with a rate hike seen as a coin toss. 0#USDIRPR
"With yields and inflation still the key risks for stocks, we expect Friday's NFP to trade as a 'good news is bad news' print," said Michael Feroli, chief U.S. economist at JPMorgan, adding that a strong jobs number would reinforce higher-for-longer pricing and put upward pressure on rates.
Conversely, equities may respond positively to a soft payrolls report as yields ease and policy expectations shift toward a dovish path, added Feroli.
Nasdaq futures NQc1 were flat while S&P 500 futures slipped 0.1%. European bourses are set for a lower open, with pan-region stock futures STXEc1 down 0.2%.
Oil climbs again
Tensions in the Middle East flared up again after Yemen's Houthis attacked Saudi Arabia, a major oil supplier. Riyadh has warned coordinated attacks by the Houthis and Iran-backed Iraqi militias were imminent.
Brent crude futures LCOc1 gained 1% to $83.38 a barrel, after jumping 3.8% overnight. They were, however, still set for a weekly loss of 7.5% and remained well off their recent peak of $102 a barrel two weeks ago.
Iran is reviewing a preliminary bill that would bar U.S., Israeli and other "hostile" vessels from transiting the Strait of Hormuz. The draft bill would impose fines of up to 20% of a ship's cargo value for violations of the proposed restrictions.
Higher oil prices lifted Treasury yields. The 2-year note US2YT=RR yield held at 4.2496% in Asia, after rising 7 basis points overnight, while the ten-year yield US10YT=RR steadied at 4.6757%, having gained 5 bps overnight.
The dollar was steady in Asia on Friday after bouncing overnight.
Against the Japanese yen JPY=, the dollar traded at 158.51 yen, after rising 0.4% overnight to break above the 200-day average of around 158. The U.S. jobs report could decide the next moves in the yen after last week's historic currency market intervention from Japan and the U.S. sparked a sharp rally.
Spot gold XAU= rose 0.1% to $4,243 an ounce, while spot silver XAG= rose 0.5% to $61.78 an ounce. GOL/
SPY•
