Asian stocks rose Wednesday after a tepid start to the week as data pointing to a softening US labour market restoked hopes the Federal Reserve will cut interest rates in the new year.
The below-forecast job openings figure bolstered optimism ahead of the closely watched non-farm payrolls report due Friday, which investors hope will confirm the economic slowdown sought by the central bank.
Markets rallied in November on growing hope that with inflation continuing to fall and other parts of the economy easing, the Fed will be able to slash rates in 2024, with some suggesting as soon as the first quarter.
The bank's statement after next week's policy meeting will be pored over by traders hoping for clues about decision-makers' thinking on rates in light of the recent data.
"A clear trend of a weakening jobs market can be observed, providing evidence that rate hikes are working their way through the economy," said Kyle Rodda at Capital.com.
But the past few days have seen fears building that the buying may have been overdone, and traders have taken a step back, with Asia particularly struggling.
"The latest US data conveyed a somewhat Goldilocks message," said Stephen Innes at SPI Asset Management
"Economic growth appears satisfactory (as evidenced by services data), and there are indications that inflation may be poised to moderate further, given the ongoing rebalancing in the job market."
He added that "the potential risk to the Santa rally doesn't hinge on a catastrophic event (despite elevated geopolitical tensions) or an abrupt negative turn in the economic data. Instead, it revolves around the simple exhaustion of the investment flows that propelled last month's historic surge".
"Additionally, there's a concern about the possibility that rate-cut pricing for 2024 might be overdone."
While the jobs figures reinforced rate cut hopes, Wall Street's three main indexes ended mixed.
However, Asia enjoyed some much-needed buying, with Tokyo up more than one percent along with Sydney.
Hong Kong and Shanghai were also up, though sentiment was dented after Moody's on Tuesday warned it had downgraded its outlook for China's credit rating owing to the country's rising debt levels and concerns over its battered property sector.
Sydney, Singapore, Seoul, Wellington, Taipei and Jakarta were also on the rise.
Elsewhere, oil prices edged up a day after falling to a five-month low on figures showing near-record US exports, which observers said investors feared could offset pledges by Saudi Arabia and other major producers to cut output.
Bitcoin dipped slightly below after breaking above the $44,000 level last seen in April last year, helped by optimism the United States will soon allow broader trading of the popular cryptocurrency.
- Key figures around 0230 GMT -
Tokyo - Nikkei 225: UP 1.7 percent at 33,339.26 (break)
Hong Kong - Hang Seng Index: UP 0.7 percent at 16,427.53
Shanghai - Composite: UP 0.1 percent at 2,974.47
Dollar/yen: UP at 147.27 yen from 147.16 yen on Tuesday
Euro/dollar: DOWN at $1.0789 from $1.0801
Pound/dollar: UP at $1.2602 from $1.2596
Euro/pound: DOWN at 85.62 pence from 85.73 pence
West Texas Intermediate: UP 0.1 percent at $72.42 per barrel
Brent North Sea crude: UP 0.2 percent at $77.35 per barrel
New York - Dow: DOWN 0.2 percent at 36,124.56 (close)
London - FTSE 100: DOWN 0.3 percent at 7,489.84 (close)
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