Asian shares mostly rose on Thursday, June 5, after soft US economic data boosted expectations the Federal Reserve will soon cut interest rates and put the focus on key jobs figures coming at the end of the week. Investors were also keeping track of developments in Donald Trump‘s trade war and signs of movement on possible talks between the US president and his Chinese counterpart Xi Jinping.
Wall Street provided an uninspiring lead as a report by payroll firm ADP showed private-sector jobs rose by 37,000 last month, a sharp slowdown from April’s 60,000 and less than a third of what was forecast in a Bloomberg survey. Another survey showed activity in the services sector contracted in May for the first time since June last year.
The readings stoked concerns that the world’s number one economy was stuttering, with the Fed’s closely watched “Beige Book” study noting that “economic activity has declined slightly”.
It flagged household and business caution caused by slower hiring and heightened uncertainty surrounding Trump’s policies. However, the readings ramped up bets on a Fed cut, with markets pricing in two by the end of the year, with the first in September.
Still, there is some concern that the US president’s tariff blitz will ramp up inflation, which could put pressure on the Fed to keep borrowing costs elevated. Most of Asia rose in early trade, with Hong Kong, Sydney, Singapore, Taipei and Wellington up. Shanghai was flat and Tokyo fell ahead of a closely watched Japanese government bond auction. Seoul rallied more than two percent on continued excitement after the election of a new president ended a six-month power vacuum. The won rose around 0.4 percent, building on a recent run-up. Jakarta edged higher as Indonesia‘s government began rolling out a $1.5 billion stimulus package after Southeast Asia’s biggest economy saw its slowest growth in more than three years in the first quarter.