Asian Shares Post Modest Gains Before US Payrolls
Asian shares edged up in the leadup to US jobs data, after stocks hit another record following Donald Trump’s announcement of a trade deal with Vietnam.
A regional equity gauge rose 0.3% after the S&P 500 closed at another record high Wednesday. News of the trade deal boosted Nike Inc. and some supply-chain exporter stocks amid hopes the accord will avert a potential supply-chain catastrophe. The dollar held its losses, hovering around three-year lows.
Treasuries edged up modestly Thursday. Yields rose in the prior session following heavy selling in the UK, where concerns about Chancellor of the Exchequer Rachel Reeves’ future reignited questions over the nation’s fiscal position. In Japan, 10-year bonds declined ahead of a closely watched auction of 30-year sovereign notes at 12:35 p.m. in Tokyo.
The cross-asset moves underscored cautious optimism as traders contend with pockets of uncertainty ahead of jobs data that will help identify the path ahead for interest rates. With stocks at a record high Trump ratcheting up trade tensions, investors are closely monitoring economic data before adding to their portfolios.
“Investors have become desensitized by Trump’s frequent erratic direction changes,” said Vey-Sern Ling, a managing director at Union Bancaire Privee. “So far most of these ‘deals’ don’t amount to much and the eventual implementation remains uncertain.”
On the Vietnam trade deal, Trump said that the Asian country had agreed to drop all levies on US imports. A 20% tariff will be placed on Vietnamese exports to the US, with a 40% levy on any goods deemed to be transshipped through the country. The deal risks provoking retaliatory steps from China, according to Bloomberg Economics.
“I’m skeptical it will be effective at this stage in stamping out Chinese exports via Vietnam to the US,” wrote Duncan Wrigley, chief China economist at Pantheon Macroeconomics. “China’s exports will either go via other markets to the US, or some value-added will be done in Vietnam so the product counts as made in Vietnam, rather than a transshipment.”
Meanwhile, UK Prime Minister Keir Starmer said Reeves will stay on as Chancellor of the Exchequer, as he sought to draw a line under speculation about her future that sparked the bond selloff. The pound was little changed against the dollar in early Asian trading.
Source: Bloomberg
