SINGAPORE: Asian stocks rose to record highs on Thursday, while the dollar strengthened after robust U.S. jobs data reduced expectations of near-term Federal Reserve rate cuts, with investors now awaiting key inflation figures.
MSCI’s broadest index of Asia-Pacific shares climbed 0.7 per cent to a fresh peak, extending its gains this year to about 13 per cent . Markets in Japan and South Korea led the advance, supported by technology stocks and improved investor confidence.
Japanese shares surged following Prime Minister Sanae Takaichi’s election victory, which raised expectations of continued economic stimulus. At the same time, the yen strengthened to around 153 per dollar, as investors anticipated fiscal stability under the new leadership.
The dollar found support after U.S. data showed stronger-than-expected job growth in January and a slight decline in the unemployment rate, underscoring the resilience of the world’s largest economy.
The data prompted investors to scale back expectations of an imminent interest rate cut. Market pricing for a Federal Reserve rate reduction in March dropped sharply following the report, though traders still expect easing later this year.
U.S. Treasury yields rose in response, with the two-year yield climbing to about 3.5 per cent , its largest one-day gain in months. Higher yields tend to support the dollar by increasing returns on U.S. assets.
Attention is now focused on upcoming U.S. inflation data, which could provide further clarity on the Federal Reserve’s policy outlook. Persistent inflation could delay rate cuts, while weaker price pressures may revive easing expectations.
Currency markets reflected the shift in sentiment, with the dollar gaining against most major currencies. The yen was an exception, strengthening on expectations that Japan’s political stability could support fiscal discipline.
European stock futures also pointed higher, suggesting positive momentum could extend beyond Asia as investors assess corporate earnings and economic conditions.
In commodities, oil prices rose modestly amid concerns about escalating tensions between the United States and Iran, which could disrupt supplies. Brent crude traded near $69.70 a barrel, while U.S. West Texas Intermediate hovered around $64.90.
Gold prices eased slightly after recent gains, as stronger yields and a firmer dollar reduced demand for safe-haven assets. __ Reuters
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