Asian stock markets were mostly quiet on Thursday as major markets like China, Hong Kong, South Korea, and Singapore remained closed for the Labor Day holiday. However, Japanese stocks saw modest gains after the Bank of Japan decided to hold interest rates steady, a move that aligned with market expectations and helped maintain investor confidence in the region.
Despite earlier flat movement, U.S. stock futures gained momentum Wednesday evening. This boost came largely from strong corporate earnings, especially from tech giants like Microsoft and Meta. As a result, S&P 500 futures rose by 0.9%, the Nasdaq 100 increased by 1.4%, and the Dow Jones added 0.4%, signaling growing optimism in U.S. markets despite economic headwinds.
President Trump’s recent announcements about easing auto tariffs and potentially securing trade deals with China, India, South Korea, and Japan lifted market sentiment. Although Chinese state media denied renewed trade talks, Trump’s comments still sparked optimism, pushing the U.S. dollar higher. This contributed to a continued slide in gold prices, which fell below the important $3,260 support level, marking their third straight day of losses.
The latest U.S. economic data shows signs of weakness. Private job creation dropped sharply in April, with only 62,000 jobs added compared to 147,000 in March. Meanwhile, Q1 GDP contracted by 0.3%, reversing the 2.4% growth seen in Q4 2024. Additionally, inflation data softened, with the core PCE index easing to 2.6%. These indicators have heightened concerns of a possible recession and increased expectations that the Federal Reserve may start cutting interest rates by June—possibly totaling 100 basis points by year-end.
Oil prices remained on the defensive, with West Texas Intermediate (WTI) crude trading around $57.80 during Asian hours. The drop follows reports that Saudi Arabia is willing to accept lower prices instead of reducing output. However, a larger-than-expected decline in U.S. crude inventories—down by 2.696 million barrels—suggests stronger demand, which might help stabilize WTI crude prices in the near term.
Geopolitical developments added another layer of uncertainty. A drone strike in southern Ukraine killed two people, while Russia hinted at large-scale mobilization if needed. Typically, such events support safe-haven assets like gold. However, gold prices continued to slide due to the stronger dollar and rising hopes of interest rate cuts, limiting its short-term appeal.
Investors are closely watching upcoming U.S. data releases—the ISM Manufacturing PMI on Thursday and the Nonfarm Payrolls report on Friday. These reports will play a crucial role in shaping expectations around future Federal Reserve actions and overall market direction.
