Asian markets fall as traders await US jobs report

A person rides a bicycle past an electronic board displaying Japan’s Nikkei index at a brokerage firm Tuesday, May 28, 2024, in Tokyo. (AP Photo/Eugene Hoshiko)

Hong Kong, China — Japanese markets started higher before seeing early gains erased on Friday as Tokyo’s benchmark Nikkei 225 index briefly hit a record high, as traders braced for a key U.S. jobs report.

The broader Topix index also surpassed its previous peak set in 1989. European markets had risen on Thursday on reassuring election news in the UK and France.

“The fact that the Topix, which indicates the overall performance of the Japanese market, has in turn broken its own record is news of great significance,” said analyst Takuma Ikemoto of Tokai Tokyo Intelligence Lab.

READ: Markets extend gains, dollar falls as US data fuels rate cut hopes

Japan’s prime market capitalization has increased significantly, showing “that Japanese companies are steadily strengthening their earnings ability and… indicating that the Japanese stock market has entered a new phase,” he added.

The yen continued to strengthen against the dollar after hitting its lowest level in nearly four decades.

News that Samsung Electronics Co. forecast second-quarter profit would beat expectations by more than 25 percent due to rising chip prices and growing demand for generative AI sent its stock price soaring and boosted trading in Seoul.

But stocks in Hong Kong and mainland China were trading lower after the European Union on Thursday imposed additional provisional tariffs of up to 38 percent on imports of Chinese electric cars.

READ: EU imposes tariffs of up to 38% on Chinese electric cars

A European Commission investigation launched last year found that state subsidies for Chinese electric vehicle makers were unfairly undermining their European rivals, whom Brussels wants to protect in their transition from thermal to electric power.

European stock markets were dominated by two major elections, with investors keeping an eye on the UK and French elections.

The return to power in Britain of the main opposition Labour Party ended 14 years of Conservative rule and strengthened the pound even before the results were announced.

After a game of musical chairs between prime ministers in Downing Street, a hoped-for period of stability has generated optimism among investors.

In France, efforts to prevent the far right from taking control of the government have boosted the euro and given life to European markets.

But analysts remain fearful that the European Union’s second-largest economy could be headed for a period of political stalemate if there is no clear winner in the polls.

READ: US Federal Reserve officials stressed ‘patience’ on rate cuts – minutes

Investor sentiment also improved on Thursday as weaker US labor market data gave the Federal Reserve room to cut interest rates, with another key jobs report due on Friday.

“We expect US labour market data to show further signs of cooling in June,” said Alvin Tan of RBC Capital Markets.

Gains were limited by Wall Street being closed for the U.S. Independence Day holiday on July 4.

Key figures around 0330 GMT

Tokyo – Nikkei 225: DOWN 0.3% and stands at 40,789.59 points

Hong Kong – Hang Seng Index: DOWN 1.0 percent to 17,850.47

Shanghai – Composite: DOWN 1.2 percent to 2,921.92

Euro/dollar: up to $1.0823 from $1.0813

Pound/dollar: up to $1.2770 from $1.2765

Dollar/yen: DOWN to 160.62 yen from 161.16 yen

Euro/pound: up to 84.75 pence from 84.69 pence

West Texas Intermediate: DOWN 0.2 percent to $83.66 per barrel

North Sea Brent crude: DOWN 0.3 percent to $87.10 a barrel

New York – Dow: Closed for public holiday

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London – FTSE 100: up 0.9 percent to close at 8,241.26 points

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