Investing.com– Most Asian stocks rose on Thursday amid increased optimism over lower U.S. interest rates, but overall gains were limited as a downward revision in payrolls data spooked markets.
Japanese stocks were by far the best performers for the day, as purchasing managers index data showed sustained growth in the country’s services sector. But Chinese markets lagged, while gains in most other Asian markets were limited.
Regional markets took a mildly positive lead-in from Wall Street, as the minutes of the Federal Reserve’s late-July meeting showed more policymakers in support of an interest rate cut- further bets for a cut in September.
U.S. stock index futures were flat in Asian trade. But optimism over a rate cut was offset by data showing a severe downward revision in U.S. payrolls data in the year to March 2024, drumming up concerns that a slowing labor market could spur a potential recession in the world’s biggest economy.
Focus this week is squarely on an address by Fed Chair Jerome Powell at the Jackson Hole Symposium on Friday.
Japanese stocks cheered by positive services PMI
Japan’s Nikkei 225 and TOPIX indexes were the best performers in Asia, rising 0.8% and 0.4%, respectively.
Sentiment towards Japan was buoyed by PMI data showing the services sector marked strong growth for a second consecutive month, as local demand was boosted by improving wages.
While Japan’s manufacturing PMI still shrank more than expected, overall business activity remained in expansion.
Strength in the Japanese economy furthers the possibility of more interest rate hikes by the Bank of Japan this year, which could present some headwinds for local markets. But stocks with exposure to domestic demand are expected to benefit from this trend.
