Asian shares rebounded on Thursday as a cooling bond market saw some bargain-buying as US Treasury yields eased from 16-year peaks.
Softer US labour data helped pull those yields back, although a looming US payrolls report could make or break the rally, while China’s continuing property sector woes remain a distraction.
Japan’s Nikkei share average snapped a five-day losing streak to record its biggest one-day percentage jump in three months, boosted by a less stormy bond market.
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The Nikkei closed up 1.80% at 31,075.36. It slid to its lowest since May 18 on Wednesday and is still on course to clock a weekly loss of 2.5%. The broader Topix gained 2.02%, or 44.87 points, to 2,263.76, clocking its best one-day percentage jump since November 11.
Chip-testing equipment maker Advantest jumped 4.7% to give the biggest boost to the Nikkei, while Tokyo Electron gained 1.6%.
Hong Kong stocks bounced back from an 11-month low after two sessions of decline, tracking firmer overseas markets.
Investors were keeping an eye out for data from China’s Golden Week holiday and on economic growth, while concerns over the mainland property sector capped any gains.
The Hang Seng Index edged up 0.10%, or 18.03 points, to 17,213.87, while the Hang Seng China Enterprises Index added 0.09%. Mainland markets remained closed for the Golden Week holiday.
Elsewhere across the region, in earlier trade, Singapore, Mumbai, Jakarta and Kuala Lumpur were also up. MSCI’s broadest index of Asia-Pacific shares outside Japan rebounded 0.9%.
Europe was set to extend the rally, with Eurostoxx 50 futures rising 0.5% and FTSE futures up 0.4%. S&P 500 futures and Nasdaq futures were mostly flat.
US Private Payrolls Report Boost
Overnight, the rout in Treasuries took a breather after a cooler-than-expected US private payrolls report and a 5% drop in oil prices offered some comfort to investors. Risk sentiment has taken a beating on the view that interest rates will stay high for longer.
Ten-year yields eased 2 basis points to 4.7123%, off 16 basis points from a fresh 16-year high of 4.8840% hit overnight.
Much will depend on US non-farm payrolls data on Friday. Economists expect 170,000 jobs created in September, slowing from 187,000 in August, while the jobless rate likely ticked lower to 3.7% from 3.8%.
The recent spike in yields has meant they have reached levels where, if sustained, would see a significant tightening in financial conditions, bolstering the case for no further Fed hikes. The CME FedWatch Tool now prices in a 23% chance of a hike in November, compared with 28% a day ago.
The US dollar came off its highs and Wall Street rebounded, led by the tech heavy Nasdaq which rose more than 1% overnight.
The battered yen also got a much needed reprieve, rallying 0.4% on Thursday to 148.52 per dollar. Traders are continuing to wonder whether a sharp rebound away from the 150 level on Tuesday was due to intervention from Japanese authorities.
Despite the renewed strength for the US dollar, analysts still see weakness for it ahead, a Reuters poll showed.
Oil prices gained on Thursday after losing a colossal 5% to where they were at the beginning of the year. Brent crude futures rose 0.7% to $86.39 per barrel and US West Texas Intermediate crude futures were also up 0.6% at $84.69. The price of gold gained 0.3% to $1,827.38 per ounce.
Key figures
Tokyo – Nikkei 225 > UP 1.80% at 31,075.36 (close)
Hong Kong – Hang Seng Index > UP 0.10% at 17,213.87 (close)
Shanghai – Composite <> CLOSED
London – FTSE 100 > UP 0.49% at 7,449.05 (0932 BST)
New York – Dow > UP 0.39% at 33,129.55 (Wednesday close)
- Reuters with additional editing by Sean O’Meara
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