Hong Kong (AFP) – Stock markets rose Friday, tracking a surge on Wall Street fuelled by bargain-buying from the previous day’s sell-off, while strong earnings from tech titans soothed worries about the impact of higher interest rates on bottom lines.
Disappointment over the Federal Reserve’s warning this week that borrowing costs would not likely be cut in March was tempered by the knowledge they are all but certain to come down this year.
Data indicating a softening US labour market — jobless claims rose and private-sector jobs creation came in below forecasts — added to the optimism that the central bank will move several times before 2025.
“Traders are not letting go of the possibility of an earlier-than-expected rate cut,” said Fawad Razaqzada of City Index and Forex.com.
“Those expectations could rise further if incoming US data from now on takes a bearish turn.”
All eyes are now on the release later Friday of the crucial non-farm payrolls report, particularly after Fed boss Jerome Powell suggested decision-makers could be swayed by a particularly big miss on key indicators.
“It could be Frantic Friday on any NFP beats or misses but an extremely bullish one if the jobs report shows a jump higher in the unemployment rate that justifies a March cut,” said SPI Asset Management’s Stephen Innes.
While most market-watchers have slashed their bets on a reduction next month, Bloomberg News said around 150 basis points of easing this year has still been priced into markets, with the first move fully priced in for May.
All three main indexes on Wall Street jumped at least one percent and are expected to build on that later in the day, as Facebook parent Meta soared more than 10 percent in after-hours trading in reaction to strong earnings and the announcement of its first quarterly dividend.
Amazon also rocketed post-close on the back of a healthy corporate report.
The readings showed that companies were still able to thrive despite worries about the higher cost of borrowing.
And Asia mostly picked up the baton.
Tokyo edged up, with game developer Nexon, which jointly created Mobile DnF with China’s Tencent, rocketing more than 20 percent.
Sydney, Seoul, Singapore, Taipei, Wellington, Manila, Bangkok and Mumbai also advanced.
In the eurozone, London, Paris and Frankfurt all opened higher.
Shanghai and Hong Kong fell, with traders still worrying about the state of China’s economy and the lack of strong measures to provide stimulus.
The property sector is of particular concern, especially after the liquidation by a Hong Kong court this week of troubled developer Evergrande, which is wallowing under more than $300 billion in debt.
Analysts also pointed to traders selling out ahead of the Lunar New Year break.
“China needs to fix its property crisis before any chance of regaining investor confidence,” said Union Bancaire Privee’s Kieran Calder.
“Until this happens, it’s a market for short-term traders.”
– Key figures around 0810 GMT –
Tokyo – Nikkei 225: UP 0.4 percent at 36,158.02 (close)
Hong Kong – Hang Seng Index: DOWN 0.2 percent at 15,533.56 (close)
Shanghai – Composite: DOWN 1.5 percent at 2,730.15 (close)
London – FTSE 100: UP 0.6 percent at 7,666.36
Dollar/yen: UP at 146.55 yen from 146.42 yen on Thursday
Pound/dollar: UP at $1.2753 from $1.2746
Euro/dollar: UP at $1.0883 from $1.0874
Euro/pound: UP at 85.34 pence from 85.29 pence
West Texas Intermediate: UP 0.5 percent at $74.21 per barrel
Brent North Sea Crude: UP 0.6 percent at $79.18 per barrel
New York – Dow: UP 1.0 percent at 38,519.84 (close)
