Nikkei 225 lifts Asian markets as weak US jobs data cools Fed hike fears

Asian markets found a steadier footing on Friday as investors took a softer US jobs report as a reason to dial back fears of an immediate Federal Reserve rate hike.

The move was not a simple risk-on surge. It was more measured than that.

Chip stocks bounced after a bruising selloff, regional PMI data pointed to continued expansion, and the dollar eased as traders reassessed the US rate path.

With Wall Street closed for Independence Day, thinner liquidity also gave investors room to reset positions after a volatile week.

Rate relief lifts risk appetite

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.3%, snapping two days of declines.

S&P 500 E-mini futures gained 0.3%, while Japan’s Nikkei reversed early losses to trade 0.7% higher.

The catalyst came from the US labour market. Nonfarm payrolls rose by just 57000 in June, well below expectations, while April and May gains were revised lower.

The unemployment rate slipped to 4.2% from 4.3%, but that improvement was flattered by workers leaving the labour force.

Participation fell to 61.5%, its lowest level since March 2021.

Westpac analysts said the data weakened the case for a Fed hike in the near term.

Futures pricing showed investors lifting the probability that the central bank keeps rates unchanged at its September meeting.

Chip bargain hunters return

South Korea’s Kospi was the standout mover, swinging between gains and losses before rising about 3%.

The rebound came as investors returned to semiconductor names after Thursday’s sharp selloff in AI-linked stocks.

The move looked more like bargain hunting than a clean reset of sentiment.

South Korea’s chip trade has delivered huge gains this year, but the rally has also left valuations exposed to profit-taking and concerns about crowded positioning.

Friday’s bounce suggested investors are still willing to buy the AI supply-chain story when prices fall quickly enough.

Regional data also helped.

Japan’s services PMI returned to expansion in June, rising to 52.2 from 50.0.

China’s private services PMI eased to 54.1 from 54.4, but stayed firmly in growth territory, with overseas demand rising at the fastest pace in 20 months.

Dollar weakens as traders watch Tokyo

Currency markets reflected the shift in rate expectations. The dollar index fell 0.2% to 100.80, while the greenback was little changed near 161.125 yen.

Traders remain alert to possible Japanese intervention after the yen’s slide to multi-decade lows.

Overnight on Wall Street, the S&P 500 finished flat and the Nasdaq slipped 0.8%, while the Dow closed at a record high.

US markets are shut on Friday for Independence Day, leaving Asia to trade in thinner conditions.

In commodities, Brent crude rose 0.5% to $72.12 a barrel, while gold climbed 1.4% to $4,179.73 as the weaker dollar supported demand for bullion.