BY COMFORT OGBONNA
Asian stock markets moved higher on Friday as investors welcomed signs that the U.S. labor market is slowing, reducing expectations that the Federal Reserve will raise interest rates in the near future. Positive economic data from across Asia also boosted confidence, pointing to continued business expansion in several of the region’s largest economies despite ongoing global economic uncertainty.
After opening the session on uncertain footing, the MSCI Asia-Pacific Index excluding Japan recovered strongly, climbing 1.3% after posting losses over the previous two trading sessions. Investors appeared encouraged by the combination of softer U.S. economic data and improving regional business activity, prompting renewed buying across equities.
South Korea led regional gains, with the Kospi Index rising about 3% as bargain hunters returned to semiconductor stocks following their recent sell-off. The rebound reflected renewed confidence that demand for technology companies remains healthy despite short-term market volatility.
Japan’s Nikkei 225 also erased early losses to trade around 0.7% higher, while U.S. stock futures pointed to a stronger start for Wall Street when trading resumes after the Independence Day holiday. S&P 500 futures advanced 0.3%, signaling continued optimism among global investors.
Fresh business surveys released Friday further supported market sentiment. Purchasing Managers’ Index (PMI) data showed that Japan’s services sector returned to growth in June after stagnating the previous month, suggesting domestic demand is regaining momentum.
China also reported continued expansion in its services industry, although the pace of growth slowed slightly compared with the previous month. However, overseas demand strengthened significantly, reaching its fastest pace in 20 months, offering encouraging signs that international business activity is improving despite ongoing global trade challenges.
Investor attention remained focused on the latest U.S. employment report released Thursday, which indicated the labor market is gradually cooling after an extended period of resilience.
The report showed that U.S. employers added significantly fewer jobs than expected during June, while payroll figures for the previous two months were revised lower. Although the unemployment rate edged down to 4.2% from 4.3% in May, the decline was largely attributed to fewer people participating in the labor force, with the labor force participation rate falling to its lowest level in more than five years.
The weaker employment data has prompted many investors to reassess expectations for U.S. monetary policy. A slowing labor market reduces pressure on the Federal Reserve to raise borrowing costs further, particularly as policymakers continue monitoring inflation and overall economic growth.
Market analysts noted that the latest figures challenge earlier expectations that the central bank would resume interest rate increases later this year. Instead, traders are increasingly betting that policymakers will leave interest rates unchanged for a longer period.
Interest rate futures now indicate a substantially higher probability that the Federal Reserve will keep rates steady at its September policy meeting. Market expectations for no rate change have risen considerably following the release of the employment data, reflecting growing confidence that inflationary pressures are easing enough to allow policymakers additional time before considering further action.
Overnight trading in the United States reflected the mixed reaction among investors. The Dow Jones Industrial Average climbed to another record closing high, supported by expectations of lower interest rates, while the S&P 500 finished little changed. The technology-heavy Nasdaq Composite declined as continued weakness in semiconductor stocks weighed on the broader technology sector.
U.S. financial markets remained closed Friday in observance of the Independence Day holiday, resulting in lighter trading volumes across global markets.
In the foreign exchange market, the U.S. dollar traded little changed against the Japanese yen at around 161.1 yen. Trading activity remained subdued due to the U.S. holiday, although investors continued monitoring Japanese authorities for any signs of possible intervention aimed at supporting the yen after its recent weakness.
The broader U.S. Dollar Index, which measures the American currency against a basket of major global currencies, slipped about 0.2%, reflecting reduced expectations for additional Federal Reserve tightening.
Commodity markets also moved higher during the Asian session. Brent crude oil futures gained roughly 0.5% to trade above $72 per barrel as investors weighed global demand prospects alongside geopolitical developments. Gold prices advanced 1.4%, benefiting from a weaker U.S. dollar and growing expectations that interest rates may remain unchanged for longer.
Cryptocurrency markets were relatively quiet. Bitcoin traded little changed near $61,500, while Ether posted a modest gain of about 0.3%, reflecting cautious sentiment among digital asset investors.
Overall, Friday’s trading session reflected growing optimism that moderating U.S. job growth and improving economic activity across Asia could support global financial markets. Investors now await additional inflation and economic data in the coming weeks for further clues on the Federal Reserve’s next policy move and the outlook for the global economy.
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