Asian stocks mostly climbed on Thursday as softer-than-expected U.S. economic data heightened investor hopes that the Federal Reserve may soon begin cutting interest rates. Market participants are closely watching for Friday’s key U.S. employment report and potential developments in U.S.-China trade discussions.
Investor sentiment was shaped by a disappointing ADP private payrolls report released Wednesday, which showed U.S. private-sector employment grew by only 37,000 jobs in May — significantly below April’s revised figure of 60,000 and well short of economists’ projections in a Bloomberg survey.
The data has intensified speculation that the Fed could shift toward easing monetary policy later this year to support a slowing economy. U.S. Treasury yields fell in response, reflecting market anticipation of rate cuts.
Mixed Performance Across Asia
The majority of Asian bourses posted gains in early trading. Hong Kong’s Hang Seng Index rose 0.9% to 23,856.54, while the Shanghai Composite was largely flat, dipping slightly by less than 0.1% to 3,374.30. Early advances were also seen in Sydney, Singapore, Taipei, and Wellington.
South Korea’s Kospi surged 2.1% to 2,829.48, buoyed by optimism surrounding newly inaugurated President Lee Jae-myung. Lee pledged to open dialogue with North Korea and strengthen trilateral ties with the United States and Japan, boosting investor confidence.
Conversely, Japan’s Nikkei 225 fell 0.2% to 37,658.46 amid caution ahead of a major government bond sale, while Australia’s S&P/ASX 200 edged down 0.1% to 8,535.10.
In Southeast Asia, Indonesia’s markets saw modest improvement following the government’s announcement of a $1.5 billion economic stimulus package. The move came after the country — Southeast Asia’s largest economy — reported its weakest quarterly growth in over three years.
Wall Street Steady Amid Labor Market Uncertainty
U.S. markets ended Wednesday on a mixed note. The S&P 500 remained nearly flat at 5,970.81, still about 2.8% below its all-time high. The Dow Jones Industrial Average slipped 0.2% to 42,427.74, while the tech-heavy Nasdaq Composite advanced 0.3% to close at 19,460.49.
The bond market, however, saw more pronounced movement. Yields on U.S. Treasuries dropped following the weak labor data, reinforcing expectations that the Fed could cut rates to counter a cooling economy.
Market attention is now firmly fixed on Friday’s U.S. nonfarm payrolls report, considered a critical indicator of broader economic health. A continued slowdown in job growth could bolster the case for monetary easing.
Trump Pressures Fed as Economic Concerns Mount
In a post on Truth Social, former President Donald Trump criticized Fed Chair Jerome Powell following the ADP report, writing: “Too Late’ Powell must now LOWER THE RATE. He is unbelievable!!” The message added political weight to the growing call for rate cuts amid economic uncertainty.
The Federal Reserve has held off on further rate cuts in 2025 after a series of reductions in 2024. Policymakers have indicated a wait-and-see approach, factoring in the economic impact of new tariffs imposed under Trump’s leadership and their potential inflationary effects.
While lower interest rates could stimulate economic activity, they also carry the risk of reigniting inflation. At the same time, rising long-term Treasury yields reflect market concern about the ballooning U.S. fiscal deficit, especially as discussions in Washington turn to further tax reductions.
