Asian markets rose on Friday, following a strong rebound in US tech stocks after Meta and Amazon reported better-than-expected earnings. Investors are also looking ahead to the US jobs data, which could influence the Federal Reserve’s monetary policy decisions.
The US tech sector recovered from a recent slump on Thursday, as two of the biggest names in the industry, Meta and Amazon, delivered impressive quarterly results. Meta, formerly known as Facebook, posted a 17% increase in revenue and a 20% increase in net income, beating analysts’ estimates. The social media giant also announced a $50 billion share buyback program and a 10-for-1 stock split. Amazon, the e-commerce behemoth, reported a 15% increase in revenue and a 50% increase in net income, also surpassing expectations. The online retailer also announced a 4-for-1 stock split and a $100 billion share buyback program.
The positive news from Meta and Amazon boosted the Nasdaq Composite index, which gained 2.7% on Thursday, its best performance since July 2023. The S&P 500 index also rose 1.4%, while the Dow Jones Industrial Average added 0.9%. The tech-heavy Nasdaq futures extended their gains on Friday, rising 1.1%, while the S&P 500 futures climbed 0.7%.
The strong performance of the US tech stocks lifted the mood in the Asian markets, as investors shrugged off the worries about the US commercial real estate sector and the regional banks, which had weighed on the market sentiment earlier this week. The KBW Regional Banking index, which tracks the performance of the regional lenders in the US, fell 2% on Thursday, after plunging 6% on Wednesday, amid concerns about the exposure of some banks to the troubled commercial real estate loans.
Asian Markets Rally, Led by Japan and Hong Kong
Asian markets followed the lead of the US tech stocks, and rallied on Friday, with Japan and Hong Kong leading the gains. The Nikkei 225 index in Tokyo jumped 1.2%, reaching its highest level since November 2023. The Japanese market was supported by the upbeat corporate earnings, the weaker yen, and the hopes for the economic recovery. The MSCI Asia Pacific index, which tracks the performance of the stocks in the region, rose 1.3%, extending its weekly gain to 0.8%.
The Hang Seng index in Hong Kong surged 1.7%, as the investors welcomed the easing of the Covid-19 restrictions in the city. The Hong Kong government announced that it would lift the ban on dine-in services after 6 pm, and allow some entertainment venues, such as cinemas and karaoke bars, to reopen from February 3. The Chinese mainland markets were also in the green, with the Shanghai Composite index edging up 0.2%, and the Shenzhen Component index advancing 0.4%. The Chinese markets were boosted by the positive data on the manufacturing and services sectors, which showed that the economy remained resilient despite the recent Covid-19 outbreaks.
Other Asian markets also posted gains on Friday, with South Korea’s Kospi index rising 0.9%, Taiwan’s Taiex index increasing 0.8%, Singapore’s Straits Times index adding 0.7%, and Australia’s S&P/ASX 200 index gaining 0.6%.
US Jobs Data in Focus, Fed Policy Eyed
The main event for the global markets on Friday is the release of the US jobs data for January, which could have a significant impact on the Federal Reserve’s monetary policy outlook. The US economy is expected to have added 180,000 new jobs in January, after losing 199,000 jobs in December, according to the median forecast of the economists surveyed by Reuters. The unemployment rate is expected to tick up to 3.8%, from 3.7% in December, while the average hourly earnings are expected to rise by 0.4%, from 0.3% in December.
The US jobs data is closely watched by the investors, as it reflects the health of the US economy, and influences the inflation expectations and the interest rate expectations. The Federal Reserve has signaled that it will start raising the interest rates in March, and will accelerate the pace of the rate hikes in 2024, as it tries to contain the rising inflation and the overheating economy. The Fed has also announced that it will end its bond-buying program, or the quantitative easing, by March, as it unwinds its massive stimulus measures.
However, the Fed has also stressed that its policy decisions will depend on the incoming data, and that it will remain flexible and patient in responding to the changing economic conditions. The Fed has said that it will tolerate a temporary overshoot of its 2% inflation target, as it expects the inflation pressures to ease in the second half of the year. The Fed has also said that it will monitor the risks to the financial stability, such as the commercial real estate sector and the regional banks, and that it will use its regulatory and supervisory tools to address them.
Therefore, the US jobs data could affect the market expectations for the Fed’s policy actions, and could trigger volatility in the bond, currency, and stock markets. A stronger-than-expected jobs report could reinforce the expectations for a March rate hike, and could push the bond yields and the dollar higher, and weigh on the stock prices. A weaker-than-expected jobs report, on the other hand, could cast doubts on the strength of the US economy, and could delay the expectations for a March rate hike, and could lower the bond yields and the dollar, and support the stock prices.