Asian stocks edge up before jobs data, gold rises

Treasury futures held their gains Wednesday after 10-year bond yields dropped to the lowest in about a month in the US session

• Asian stocks rose as traders await US jobs data and possible Fed rate cuts
• MSCI Asia Pacific Index hit an all-time high, led by gains in South Korea
• Weak US retail sales reinforced expectations for Fed rate cuts later this year

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Asian stocks posted a modest gain at the open as traders braced for US jobs data on Wednesday after weak retail sales reinforced bets that the Federal Reserve will cut interest rates later this year.

The MSCI Asia Pacific Index rose 0.4% to an all-time high. The gauge is set for its strongest three-day gain in a month. South Korea, the world’s best-performing market this year, edged up.

Treasury futures held their gains Wednesday after 10-year bond yields dropped to the lowest in about a month in the US session. There will be no cash trading in Treasuries during the Asian day as Japan is closed for a holiday. Gold, which typically benefits when rates are cut, edged up as money markets see slightly higher odds of three Fed cuts this year — with two already fully priced in.

Unexpectedly weak December retail sales pointed to softer consumer momentum as the year ended, reinforcing expectations the Fed may cut rates later this year. Attention now turns to the jobs report and Friday’s inflation data for further signals on the policy outlook, even as equities waver on concerns over heavy artificial-intelligence spending by technology firms.

The jobs report “will be key,” said Bret Kenwell at eToro. “A weak print could push sentiment further toward risk-off if growth worries start to build, but a solid print may ease some of those concerns.”

Economists predict a 65,000 rise in January payrolls. Such an outcome would be the best in four months. The unemployment rate is seen holding at 4.4%. There will be an annual revision to the jobs count — which is expected to reveal a markdown in the year through March 2025.

On Tuesday, the S&P 500 slipped 0.3% amid weakness in several tech names, though the gauge remained near the record reached last month. The dollar was steady, while Bitcoin continued to trade below $70,000.

Meanwhile, Fed Bank of Cleveland President Beth Hammack said rates could be on an extended hold while officials evaluate incoming economic data. Her Dallas counterpart Lorie Logan said she’s hopeful inflation will continue to come down, though it would take “material” weakness in the labor market for her to support more rate cuts.

“We expect a further two rate cuts of 25 basis points from the Federal Reserve this year,” said Mark Haefele at UBS Global Wealth Management. “Solid economic growth, in part supported by productivity gains, is supporting corporate earnings.”

Another key theme for markets is spending on AI and the disruptions it’s creating.

On Wall Street, rising fears about AI keep pummeling the shares of companies at risk of being caught on the wrong side of it all, from small software companies to big wealth-management firms.

The latest selloff erupted on Tuesday when a tax-strategy tool rolled out by a little-known startup, Altruist Corp., sent the shares of Charles Schwab Corp., Raymond James Financial Inc. and LPL Financial Holdings Inc. down by 7% or more.

Last week’s steep drop in software stocks on concern about competition from AI was likely overdone and the US economy remains poised for strong growth this year, according to Goldman Sachs Group Inc.’s chief executive officer.

“I think the narrative over the last week has been a little bit too broad,” David Solomon said Tuesday at a UBS Group AG conference in Key Biscayne, Florida. “There’ll be winners and losers — plenty of companies will pivot and do just fine.”