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Investors are looking for Fed hints in the form of U.S. jobs data, thus stocks are rising

Image: Reuters Berita 24 English - After softer-than-expected U.S. employment data, Asian stocks climbed broadly on Friday morning, raising ...

Image: Reuters

Berita 24 English - After softer-than-expected U.S. employment data, Asian stocks climbed broadly on Friday morning, raising the prospect of the Federal Reserve easing its policy tightening stance in the coming months.

MSCI's broadest index of Asia-Pacific stocks outside of Japan was up 0.45%, boosted by a strong Wall Street close. The Nikkei 225 index in Japan was up 0.96 percent, while Seoul stocks were up 0.77 percent, and Australia's resource-heavy index was up 0.81 percent.

Tech stocks led a Wall Street rise overnight, raising the S&P500 1.84 percent, the Nasdaq Composite 2.68 percent, and the Dow Jones Industrial Average 1.29 percent.

The ADP National Employment Report released on Thursday revealed that payrolls in the United States grew at a slower-than-expected rate last month.

Investors are now waiting for the Labor Department's full jobs data, which is expected later on Friday, for confirmation of a labor market slowdown, which could persuade the Federal Reserve to hold off on interest rate hikes for the rest of the year.

"Right now, anything that may be seen as restraining the Fed's tightening could be perceived as beneficial for markets," said Rob Carnell, Asia head of research at ING.

"As a result, weak economic data turns into a positive for stocks."

Economists estimate that 325,000 jobs were added in the United States last month, bringing unemployment down to 3.5 percent.

"Any variation from these statistics that indicates the labor market holding together better than this might be detrimental for stocks and vice versa," Carnell said.

The Fed and global policymakers are most concerned about inflation. Officials from the Federal Reserve have stated that unless inflation moderates, interest rates in the United States will likely continue to rise significantly.

"After a worse than expected May ADP employment figure, front-end rate hike impetus that had built the day before on good economic data instantly fell off, signaling things are cooling," said Stephen Innes of SPI Asset Management.

Markets have priced in two 50-basis-point Fed rate hikes in June and July, but uncertainty over what will happen after that has driven the dollar about this week.

The US dollar currency index, which measures the greenback against six major currencies, fell 0.039 percent to 101.71, halting a week-long surge.

The yen has been under pressure due to Japan's ultra-low interest rates, and it was last flat at 129.80 per dollar, down 2% against the greenback this week.

Treasury rates in the United States were mixed ahead of the non-farm payrolls data.

The benchmark 10-year yield was 2.9168 percent, while the 2-year yield, which is sensitive to rate predictions in the United States, was 2.6438 percent.

Even as oil-producing countries OPEC+ agreed to increase output, oil prices rose as U.S. crude inventories declined amid rising demand. Brent crude futures were up 0.09 percent at $117.72 a barrel, while WTI crude in the United States was at $116.94.

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