Asian stocks climb on Fed rate cut hopes; Wall Street's big rally loses steam amid signs of slowing US economic data

Asian stocks mostly rose on Thursday as weaker US economic data raised hopes that the Federal Reserve may soon cut interest rates, with attention focused on upcoming employment data.Investors are also watching closely for upcoming US jobs data and any updates on possible trade talks between President Trump and China’s Xi Jinping, which White House sources suggest could occur this week.US markets were subdued following an ADP report showing private-sector employment increased by 37,000 in the previous month, significantly below April's 60,000 and falling short of Bloomberg survey predictions.US futures declined slightly alongside oil prices. The Japanese Nikkei 225 decreased by 0.2% to 37,658.46, while Australia's S&P/ASX 200 recorded a marginal decline of 0.1% to 8,535.10.The South Korean Kospi surged 2.1% to 2,829.48 as newly appointed president Lee Jae-myung commenced his leadership, pledging to initiate dialogue with North Korea and strengthen trilateral cooperation with the US and Japan.The Hang Seng index in Hong Kong rose 0.9% to 23,856.54, whilst Shanghai's Composite remained largely stable with a minimal decrease of less than 0.1% to 3,374.30.

Early trading in Asia showed gains across Hong Kong, Sydney, Singapore, Taipei and Wellington. Shanghai remained stable while Tokyo declined prior to a significant Japanese government bond sale.Indonesian markets improved slightly as authorities implemented a $1.5 billion economic stimulus after the region's largest economy recorded its weakest growth in over three years during the first quarter.Earlier on Wednesday, the S&P 500 remained essentially flat at 5,970.81, staying 2.8% below its peak.

The Dow Jones Industrial Average declined 0.2% to 42,427.74, while the Nasdaq composite increased 0.3% to 19,460.49.The bond market displayed significant movement, with Treasury yields falling after disappointing economic reports.The ADP report indicated that private sector employment growth in the US fell considerably short of economists' projections last month. This could signal potential concerns for Friday's comprehensive employment report from the US Labour Department, a crucial economic indicator for market analysts.The US employment sector has demonstrated unexpected stability despite prolonged high inflation and potential impacts from President Donald Trump's tariff policies. However, any deterioration in employment could adversely affect the broader economy.Weaker job data has led traders to bet that the US Federal Reserve may cut interest rates later this year to support the slowing economy. This expectation pushed down Treasury yields.The drop followed a disappointing ADP jobs report, which also triggered a reaction from Donald Trump. On his Truth Social platform, he urged Fed Chair Jerome Powell to act faster, saying, “‘Too Late’ Powell must now LOWER THE RATE.” “He is unbelievable!!!” he added.So far in 2025, the Fed hasn’t lowered rates after cutting them several times in 2024. One reason for holding off is to assess how Trump’s tariffs could impact inflation and economic growth.While lower interest rates may help boost the economy, they also risk driving inflation higher. At the same time, long-term Treasury yields have been rising because investors are concerned about the growing US debt, especially with new tax cuts being discussed in Washington.

Key Market Figures as of 02.30 GMT