Asia shares dazed by trade uncertainty, US jobs risks
SYDNEY (Reuters) - Asian share markets dithered as investors waited for concrete signs of progress in the US-Mexican trade standoff, while bracing for a US jobs report that could sway the course of interest rates there.
MSCI’s broadest index of Asia-Pacific shares outside Japan edged 0.04% higher and looked set for another cautious session being up just 0.6% for the week so far.
Japan’s Nikkei firmed 0.3%, but South Korea slipped 0.5%. E-Mini futures for the S&P 500 were mostly flat.
Mexican and US officials had held a second day of talks on trade and migration on Thursday amid reports President Donald Trump might delay the imposition of tariffs that was due on Monday.
That had helped the Dow end Thursday up 0.71%, while the S&P 500 gained 0.61% and the Nasdaq 0.53%.
However, the White House later said the tariffs would go ahead as scheduled, and there were reports Trump might declare a national emergency to dodge any Senate objections.
The uncertainty kept investors from getting too bullish, particularly with the US payrolls report promising to be an unknown quantity later in the session.
Market forecasts are for jobs to rise a solid 185,000 in May and unemployment to stay at a low 3.6%, though much was in doubt after dismal data on private hiring released earlier in the week.
“We haven’t adjusted our projection of 185,000 for overall nonfarm payrolls in May,” said Kevin Cummins, senior US economist at RBS.
“However, any major surprises in May payrolls seem tilted to the low side of our forecast, which wouldn’t be too surprising given the rising uncertainty in the outlook in the US and the above-trend gain registered in April.”
Oddly, a weak number might actually prove positive for equities since it would bolster the case for an early rate cut from the Federal Reserve.
Markets have fully priced in a cut by September, and a further two easings by mid-2020.
Two-year Treasury yields were near their lowest since December 2017 at 1.88%, having fallen 28 basis points in just two weeks.