Asian markets started the week on a stronger note, buoyed by hopes that the U.S. Federal Reserve could soon cut interest rates following weak U.S. jobs data. This shift in expectations has reignited investor confidence after weeks of volatility.
What Happened
A disappointing U.S. payrolls report showed that job growth has slowed significantly, with the three-month average falling to just 35,000, compared to 231,000 earlier this year. This slowdown, combined with revisions to past data, pushed markets to expect interest rate cuts as early as September.
Simultaneously, political developments in the U.S. – including President Donald Trump’s dismissal of the head of Labor Statistics and an upcoming Fed governorship appointment – have raised concerns over the independence of economic institutions.
Immediate Market Impact
- MSCI Asia-Pacific Index (ex-Japan) rose 0.7%.
- South Korea’s KOSPI gained 1.1%, while Japan’s Nikkei dropped 1.4% due to yen strength.
- S&P 500 and Nasdaq futures both rose 0.4%, showing Wall Street’s cautious optimism.
Currency & Commodities Movement
- The U.S. dollar fell, with the yen and euro gaining ground.
- Gold remained steady at $3,357/oz, reflecting risk-hedging.
- Oil prices slid as OPEC+ agreed to ramp up production, pulling Brent crude down to $69.52/barrel.
Investor Sentiment & What’s Next
Investors are now 85% priced in for a Fed rate cut in September, with expectations of 100 basis points of easing over the next year. However, questions about data credibility and policy independence under Trump’s administration remain a shadow on the horizon.Meanwhile, attention is turning to upcoming corporate earnings reports from major companies like Disney, McDonald’s, and Caterpillar, which could either reinforce or challenge the current market mood.