Asian Stocks Rise as Weak US Jobs Data Eases Rate-Hike Fears

ASIAN GAMES - JAKARTA. Asian equities rebounded on Friday as investors welcomed softer-than-expected U.S. jobs data that eased concerns about an imminent interest-rate hike by the Federal Reserve, with South Korean stocks surging 5%.

The MSCI EM Asia index climbed 2% during the day, largely driven by the jump in the tech-heavy KOSPI index, which triggered a "sidecar" trading curb in South Korea.

 

Chipmakers Samsung Electronics and SK Hynix added between 7% and 9%. The KOSPI's rebound made up most of the index's 8% drop on Thursday, which had also triggered a sidecar curb, underscoring the AI-driven volatility in South Korean equity markets.

 

A gauge tracking KOSPI volatility jumped to 90.96 from 84 the previous day. Stocks in Taiwan, the largest market by weight in the index, advanced marginally. TSMC, the world's top contract chipmaker, traded slightly lower.

 

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Data released overnight showed U.S. job growth slowed sharply in June and payroll gains for the prior two months were revised lower, pointing to a cooling labour market that dampened expectations of a near-term Federal Reserve rate hike.

 

Fed funds futures are pricing an implied 46.8% probability that the U.S. central bank will keep rates steady at its meeting on September 15 to 16, compared to a 35.8% chance a day earlier, according to the CME Group's FedWatch tool.

 

"Labour market data cooled modestly, allowing the market to hover in Goldilocks mode," DBS analysts said in a note.

 

"While the Federal Reserve tightening is priced as a base case, the urgency for tightening has diminished somewhat for the immediate term and should provide some comfort for sentiment."

 

In Southeast Asia, Jakarta's main equities gauge rose 2.6%, while Thailand's benchmark index added 1.7% to a more than three-year high, mainly driven by Nvidia-supplier Delta Electronics Thailand, which rose around 3%.

 

Thai stocks have been faring well this year, relative to their regional Southeast Asian peers, largely due to Delta Electronics which has offered local investors exposure to the AI trade beyond South Korea's and Taiwan's tech heavyweights.

 

The benchmark SET index has risen 5% just this week and around 28% this year, with Delta advancing 84%. Foreigners have poured in 34.14 billion baht ($1.03 billion) this year, compared with outflows of around $4 billion from Indonesia.

 

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Elsewhere, stocks in Manila, Singapore and Kuala Lumpur advanced marginally on the day. Currencies held their ground against the U.S. dollar: the rupiah lingered around 17,955, while the Philippine peso edged higher to 61.407, partly recovering from a three-week low hit on July 1.

 

The Malaysian ringgit added 0.3%, while the South Korean won slipped 0.3%.