SINGAPORE- Asian stocks broadly rose on Wednesday, while the dollar was steady as a softening US labor market firmed up bets of a Federal Reserve interest rate cut in September and investors awaited crucial payrolls report later this week.
Worries about a cooling US economy, however, kept a lid on risk appetite, while the focus in Asia remained on Indian markets, with stocks volatile on Wednesday after the plunge in the previous session as voting results showed a slimmer-than-expected victory margin for Prime Minister Narendra Modi.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.76 percent , although the Nikkei fell 1 percent as the renewed strength in Japanese yen weighed.
The buoyant mood is set to continue in Europe, with Eurostoxx 50 futures German DAX futures and FTSE futures all up 0.5 percent ahead of PMI data from much of the region.
Data overnight showed US job openings fell more than expected in April to the lowest level in more than three years, a sign that labor market conditions are softening.
The data emboldened bets of rate cuts this year, with markets pricing in 45 basis points of easing. Traders are also pricing in a 65 percent chance of a rate cut in September, compared with 46 percent a week earlier, CME FedWatch tool showed.
“I think there’s a strange trade off between those who like that data as encouraging thoughts of rate cuts and those who are looking at things going on and that are not great news,” said Rob Carnell, ING’s regional head of research for Asia Pacific.
“Asia wants to find a little bit of good news in the very mixed run out of numbers that we’re seeing.”
The market focus will now be on the U.S payrolls report due on Friday.
Benchmark 10-year note yields were at 4.3435 percent on Wednesday, after hitting an almost three-week low of 4.314 on Tuesday following the jobs data.
The dollar index which measures the US currency against six rivals, was steady at 104.21 but close to the near two-month low of 103.99 it hit on Tuesday.
