Asian stocks rally as weak U.S. jobs data eases rate-hike fears

Asian equity markets rallied on Friday as investors snapped up battered technology stocks following a weaker-than-expected U.S. jobs report that eased fears of a near-term Federal Reserve interest rate hike. Seoul's Kospi surged 5.8% to close at 8,088.34, clawing back a portion of Thursday's punishing 7.9% decline, while Japan's Nikkei 225 climbed 1.5% to finish at 69,744.07.bssnews

Jobs Miss Soothes Rate-Hike Fears

The rebound was triggered by Thursday's U.S. employment report, which showed the economy added just 57,000 jobs in June — roughly half the 113,000 economists had forecast. Payroll figures for April and May were also revised lower by a combined 74,000 jobs. The data prompted traders to cut odds of a July Fed rate hike below 20%, with September hike probability falling to around 60%, according to Reuters.reuters+1

The labor market weakness gave the Fed "breathing room to hold off an expected rate hike for now," AFP reported. Markets had been rattled in recent sessions by persistent inflation — the Fed's preferred core PCE gauge rose to 3.4% in May — and hawkish rhetoric from Chair Jerome Powell.finance.yahoo+1

Semiconductor Stocks Lead the Recovery

South Korea's chip giants led the bounce after being at the center of Thursday's selloff. SK Hynix and Samsung Electronics had plunged 14.6% and 9.1% respectively on Thursday as the Kospi suffered its worst single-day drop in years. The index had fallen roughly 20% from its June 19 record high before Friday's recovery.businessinsider+1

Hong Kong's Hang Seng Index rose 1.4%, while the Shanghai Composite gained 0.4%. Gains also extended to Manila, Bangkok, Jakarta, Singapore, Taipei, and Mumbai.bssnews

PMI Data Reinforces Regional Expansion

Friday's rally was buttressed by services PMI readings across the region. China's RatingDog General Services PMI came in at 54.1 for June, easing slightly from 54.4 in May but remaining firmly in expansion territory, with new export business growing at its fastest pace in 20 months, according to Reuters. Japan's services PMI returned to growth at 52.2 in June after stalling at 50.0 in May.reuters+1

The combination of a cooling U.S. labor market and resilient Asian economic activity offered investors a reason to buy back into a region that had sold off sharply amid global rate-hike anxiety. Whether the reprieve lasts may depend on whether inflation data in coming weeks reinforces or undercuts the case for the Fed to stay on hold.