Asian Stock Market: Mixed mood prevails amid pre-NFP trading lull

• Asia-Pacific equities track Wall Street’s performance to trade mixed.
• Markets in Australia, New Zealand print mild gains amid hopes of stimulus from China, receding hawkish central bank bias.
• Covid woes, Sino-American tussles join pre-NFP anxiety, hawkish Fed bets to weigh on sentiment elsewhere.

Asian equities trade mixed on Friday as market players await the US employment data for August. Also adding filters to the trading are the complex concerns surrounding China and a light calendar.

While portraying the mood, the MSCI’s Index of Asia-Pacific shares outside Japan remains pressured at a five-month low, down 0.35% intraday at the latest. However, Japan’s Nikkei 225 remains directionless at 27,680 heading into the European session.

That said, downbeat trade numbers from New Zealand and softer activity data from Australia, as well as China, weigh on the previously hawkish hopes from the Reserve Bank of New Zealand (RBNZ) and the Reserve Bank of Australia (RBA). As result, stocks in Auckland and Canberra print mild gains at the latest. On the same line could be the hopes of more stimulus from China as the dragon nation shows readiness to streamline the struggling real estate sector.

However, covid woes, China’s tussles with the US and the market’s lack of conviction in accepting the calls that the dragon nation will be able to avoid recession seem to weigh on the equities in Beijing, as well as connected economies in the Asia-Pacific zone.

Furthermore, upbeat US data and hawkish Fedspeak also challenge the region’s share traders as the yield curve inversion hint at the economic slowdown.

US 10-year Treasury yields print a one-pip fall from the highest levels since late June, to 3.25%, while the two-year US bond coupons follow the trend while retreating from the 15-year high. Further, the CME’s FedWatch Tool signals a 74% chance of the Fed’s 75 basis points of a rate hike in September versus nearly 69% previously.

It’s worth noting that the S&P 500 Futures struggle for clear directions near 3,670 after bouncing off the six-week low the previous day.

While the pre-data anxiety restricts share market moves, downbeat hopes from the US Nonfarm Payrolls (NFP) keep traders on the edge. Forecasts suggest the US NFP and Unemployment Rate for August to print 300K and 3.5% figures respectively versus 528K and 3.5% in that order.

Also read: S&P 500 Futures retreat, yields dribble at multi-year top as markets await NFP