Asian stock markets opened Friday’s session on a mixed note after a weaker-than-expected U.S. jobs report reduced expectations that the Federal Reserve would raise interest rates soon. The latest data showed signs of cooling in the U.S. labor market, prompting investors to reassess the outlook for monetary policy.

Asian Markets Trade Mixed

MSCI’s broadest index of Asia-Pacific shares outside Japan fluctuated between gains and losses before edging up 0.1%, after two consecutive days of declines.

In South Korea, the Kospi came under pressure as chip stocks tracked sharp losses among U.S. semiconductor names. Meanwhile, S&P 500 and Nasdaq e-mini futures both rose 0.1%, while Japan’s Nikkei 225 fell 1%.

U.S. Jobs Data Weighs on Fed Rate-Hike Expectations

Data released on Thursday showed that U.S. job growth slowed sharply in June, while payroll gains for the previous two months were also revised lower. This pointed to a cooling labor market.

The unemployment rate fell from 4.3% in May to 4.2% in June, but the decline was mainly driven by workers leaving the labor force. The labor force participation rate also dropped to its lowest level in more than five years.

According to Westpac analysts, the figures challenged the narrative that the Fed remains on track to raise interest rates in the second half of the year.

Markets Reprice Fed Policy Outlook

Following the jobs report, traders reduced expectations of an imminent Fed rate hike. Fed funds futures now imply a 46.8% probability that the Fed will keep rates unchanged at its September 15 - 16 meeting, up from 35.8% a day earlier.

This suggests that markets are increasingly leaning toward the possibility that the Fed may delay any further rate hike until October, rather than moving in September.

Wall Street Ends Mixed Ahead of Holiday

Overnight, U.S. stocks delivered a mixed performance. The S&P 500 ended nearly flat, the Nasdaq Composite slipped 0.8%, while the Dow Jones Industrial Average rose to a record closing high.

The U.S. market will be closed on Friday for the Independence Day holiday, which could keep liquidity thinner during the Asian session.

U.S. Dollar Steady as Yen Remains in Focus

The U.S. dollar rose 0.2% against the Japanese yen to around 161.435 yen at the start of Asian trading. Earlier, the yen had strengthened suddenly after reports suggested that Japanese authorities may be adopting a new approach to currency-market intervention.

The U.S. Dollar Index held steady around 100.98 after falling 0.5% in the previous session.

Commodities and Cryptocurrencies

In commodities, Brent crude futures slipped 0.4% to $71.49 per barrel as trading resumed in Asia. Gold edged up 0.1% to $4,125.49 per ounce.

In cryptocurrencies, Bitcoin fell 0.4% to $61,306.45, while Ether declined 0.7% to $1,692.16.

Conclusion

Asian markets entered the session with a cautious tone after U.S. jobs data showed signs of cooling in the labor market. This weakened expectations of an imminent Fed rate hike and pushed investors to reassess the policy outlook for the coming months.

In the short term, the direction of the U.S. dollar, Treasury yields, labor-market data, and signals from the Fed will remain key drivers of global market sentiment.

Source: Reuters