Asian Markets Swing As Traders Eye Major US Jobs Report

Asian markets fluctuated Friday and investors trod cautiously ahead of US jobs data that could play a key role in the Federal Reserve's plans for cutting interest rates, with the bank's next policy decision looming next week.

The mood on trading floors has ebbed and flowed for weeks as dealers try to read the tea leaves on the Fed, with the latest data suggesting the labour market was finally softening, giving decision-makers room to begin loosening monetary policy.

Figures on Tuesday showed job openings had fallen more than expected, while Wednesday's ADP private-sector gauge also came in below forecasts.

Preceding both of them was news that the US factory sector contracted in May for a second successive month, indicating the world's top economy was slowing down.

But topping the bill this week is the non-farm payrolls report, which is closely watched by the Fed for an idea about health of the labour market. Bank officials have long-argued that a softening on the jobs front and lower inflation were their main tests when deciding on when to cut rates.

Numerous policymakers have lined up to say they will only make their choice based on the incoming data -- and most have warned they are happy to stay higher for longer to meet their goals.

"We expect the overall message from the non-farm payrolls report to be one of strength, albeit ebbing," Commonwealth Bank of Australia's Joseph Capurso said.

"Consequently, market pricing for the (policy board's) first rate cut in September may be pushed out."

The jobs reading will be followed by the Fed's next decision on Wednesday, which will be accompanied by its latest "dot plot" of rate expectations.

Its previous guidance in March was for three cuts, but many are preparing for that to be whittled down to two at most in light of recent data showing inflation remains sticky and decision-makers' reluctance to move too early.

Still, cuts by the European Central Bank and Canada's central bank provided hope the Fed will eventually follow.

HSBC's Ryan Wang said at May's policy meeting that "Fed chair Jerome Powell emphasised that the inflation data so far in 2024 had not provided the policymakers with that 'greater confidence'.

"It will be important to see if Chair Powell expresses any more optimism about the inflation outlook at the June press conference."

A mixed performance on Wall Street, where the S&P 500 and Nasdaq came off Wednesday's record highs, was matched by a tepid performance in Asia, with markets swinging in and out of positive territory through the day.

There was little reaction to data showing Chinese exports surged far more than expected but imports were slower, highlighting the uneven recovery in the world's number two economy.

Tokyo, Hong Kong, Singapore, Wellington, Taipei and Jakarta fell, while Shanghai, Sydney, Seoul, Mumbai, Bangkok and Manila were in the green.

London, Paris and Frankfurt dipped.

Martin Whetton, of Westpac Banking Corp, said: "The non-farm payrolls data is on the horizon and it's unlikely, given moves seen, that fresh risk appetite would appear."

Tokyo - Nikkei 225: DOWN 0.1 percent at 38,683.93 (close)

Hong Kong - Hang Seng Index: DOWN 0.6 percent at 18,366.95 (close)

Shanghai - Composite: UP 0.1 percent at 3,051.28 (close)

London - FTSE 100: DOWN 0.2 percent at 8,269.35

Dollar/yen: DOWN at 155.39 yen from 155.59 yen on Thursday

Euro/dollar: DOWN at $1.0894 from $1.0896

Pound/dollar: UP at $1.2798 from $1.2794

Euro/pound: DOWN at 85.11 pence from 85.14 pence

West Texas Intermediate: UP 0.1 percent at $75.60 per barrel

Brent North Sea Crude: UP 0.1 percent at $79.93 per barrel

New York - Dow Jones: UP 0.2 percent at 38,886.17 (close)