Asian shares pause for US jobs, oil extends gains on Mideast risk

SYDNEY: Asian shares held their breath on Friday for US jobs ​data that could prove pivotal for next month’s interest-rate decision by the Federal Reserve, while rising oil prices ‌served as a reminder that Middle East tensions remain far from resolved.

MSCI’s broadest index of Asia-Pacific shares outside Japan held flat and was down 0.4% for the week. Japan’s Nikkei dropped 0.9% although it was set for a weekly rise of 1.2%.

South Korea’s KOSPI slipped 0.5% and was down 5.0% for the week ​for a seventh straight week of declines. The index had doubled in the first half of the year, swept up ​by the blistering demand for AI-linked chip stocks. China’s CSI 300 rose 0.2%.

After bouts of volatility sparked ⁠by concerns over the durability of the AI-driven rally, investors are now squarely focused on the U.S. payrolls report due later in ​the day, which could prove crucial for the interest-rate outlook. Forecasts are centred on a rise of 80,000 jobs for July after a 57,000 ​gain in June, with the unemployment rate forecast to hold steady at 4.2%.

The stakes are high as markets cannot seem to make up their mind about how the Federal Reserve might move next month, with a rate hike seen as a coin toss.

“With yields and inflation still the key risks for stocks, ​we expect Friday’s NFP to trade as a ‘good news is bad news’ print,” said Michael Feroli, chief U.S. economist at JPMorgan, adding ​that a strong jobs number would reinforce higher-for-longer pricing and put upward pressure on rates.

Conversely, equities may respond positively to a soft payrolls report as ‌yields ease ⁠and policy expectations shift toward a dovish path, added Feroli.

Nasdaq futures were flat while S&P 500 futures slipped 0.1%. European bourses are set for a lower open, with pan-region stock futures down 0.2%.

Oil climbs again

Tensions in the Middle East flared up again after Yemen’s Houthis attacked Saudi Arabia, a major oil supplier. Riyadh has warned coordinated attacks by the Houthis and Iran-backed Iraqi militias were imminent.

Brent crude futures gained 1% to $83.38 ​a barrel, after jumping 3.8% overnight. ​They were, however, still set ⁠for a weekly loss of 7.5% and remained well off their recent peak of $102 a barrel two weeks ago.

Iran is reviewing a preliminary bill that would bar U.S., Israeli and other “hostile” vessels from transiting the ​Strait of Hormuz. The draft bill would impose fines of up to 20% of a ship’s cargo ​value for violations ⁠of the proposed restrictions.

Higher oil prices lifted Treasury yields. The 2-year note yield held at 4.2496% in Asia, after rising 7 basis points overnight, while the ten-year yield steadied at 4.6757%, having gained 5 bps overnight.

The dollar was steady in Asia on Friday after bouncing overnight.

Against the Japanese ⁠yen , the ​dollar traded at 158.51 yen, after rising 0.4% overnight to break above the ​200-day average of around 158. The US jobs report could decide the next moves in the yen after last week’s historic currency market intervention from Japan and the U.S. sparked ​a sharp rally.

Spot gold rose 0.1% to $4,243 an ounce, while spot silver rose 0.5% to $61.78 an ounce.