Asian Markets Trade Mixed Ahead of US Jobs Data; Oil Extends Rally on West Asia Tensions

Asian Markets Cautious Ahead of Key US Jobs Report; Oil Extends Gains on West Asia Tensions

Asian stock markets traded cautiously on Friday as investors awaited the release of the closely watched US non-farm payrolls (NFP) report, which is expected to play a crucial role in shaping the US Federal Reserve’s interest rate decision next month. Meanwhile, a fresh spike in oil prices highlighted lingering geopolitical risks in West Asia.

MSCI’s broadest index of Asia-Pacific shares outside Japan was largely unchanged in early trade, though it remained down 0.4% for the week. Japan’s Nikkei 225 fell 0.9%, but was still on track to post a weekly gain of 1.2%.

South Korea’s Kospi slipped 0.5%, extending its losing streak to seven consecutive weeks and taking its weekly decline to 5%. Chinese equities bucked the trend, with the CSI 300 Index edging up 0.2%.

Focus Turns to US Payrolls Data

Investor attention is firmly on the US jobs report due later in the day, with economists expecting the economy to have added around 80,000 jobs in July, following a gain of 57,000 in June. The unemployment rate is projected to remain unchanged at 4.2%.

The data is expected to have a significant impact on expectations surrounding the Federal Reserve’s next policy meeting, as markets remain divided over whether the central bank will keep interest rates elevated or begin easing monetary policy.

Analysts say a stronger-than-expected jobs report could reinforce expectations that interest rates will stay higher for longer, potentially putting pressure on equity markets by pushing bond yields higher. Conversely, weaker employment data could boost investor sentiment by strengthening the case for future rate cuts.

US stock futures reflected the cautious mood, with Nasdaq futures trading flat and S&P 500 futures slipping 0.1%. European markets were also expected to open lower.

Oil Rallies on Renewed West Asia Tensions

Crude oil prices extended gains after geopolitical tensions escalated in West Asia. Concerns intensified following attacks by Yemen’s Houthi rebels on Saudi Arabia, raising fears of potential disruptions to global energy supplies.

Brent crude rose 1% to $83.38 per barrel, building on a sharp 3.8% rally in the previous session. Despite the rebound, prices remained well below their recent peak and were still on course for a weekly decline.

Adding to market uncertainty, Iran is reportedly reviewing draft legislation that could restrict the passage of US, Israeli and other “hostile” vessels through the Strait of Hormuz, one of the world’s most strategically important oil shipping routes.

Dollar, Bond Yields and Gold

Higher oil prices pushed US Treasury yields higher, with the 2-year Treasury yield holding near 4.25% and the 10-year yield remaining close to 4.68% after overnight gains.

The US dollar was little changed in Asian trading after strengthening against major currencies in the previous session. Against the Japanese yen, the greenback traded around 158.5, with traders watching the US jobs data for further direction following Japan’s recent currency market intervention.

In commodities, spot gold edged up 0.1%, while spot silver gained 0.5%, as investors balanced safe-haven demand against expectations for US monetary policy.