(May 3): Equities in Asia were set for early gains after stocks and bonds rallied on Wall Street Thursday, ahead of crucial US jobs data due later Friday.

Share futures for Australia and Hong Kong edged higher after the S&P 500 rose 0.9% and tech-heavy Nasdaq 100 climbed 1.3%. Markets in Japan and mainland China are closed Friday for a holiday.

Gains for US tech heavyweights extended into late hours after better-than-estimated results from Apple Inc, with the iPhone maker also raising its dividend and announcing a US$110 billion (RM523.15 billion) share buyback. The company’s stock rose more than 6% in post-market trading after a small gain during regular hours, with the uplift supporting early Friday gains for US futures.

Treasuries rallied across the curve Thursday. The 10-year yield fell five basis points to 4.58%, while the policy-sensitive two-year yield dropped nine basis points. Treasuries trading in Asia will be closed due to the holiday in Japan.

An index of the dollar fell by the most since December on Thursday, while the yen strengthened to the highest level relative to the dollar in almost three weeks.

The moves come ahead of Friday’s nonfarm payrolls data that will help identify the path forward for Federal Reserve (Fed) policy. Economists surveyed by Bloomberg forecast a 240,000 gain in payrolls, which would be the slowest pace since November.

The Fed decided Wednesday to leave the target range for the benchmark rate at 5.25% to 5.5% following a slew of data that pointed to lingering price pressures. Yet Chair Jerome Powell said it’s unlikely that the Fed’s next move would be to raise rates.

“While the Fed appears to have all but ruled out a rate hike, it also made clear it’s willing to keep rates higher for longer,” said Chris Larkin at E*Trade from Morgan Stanley. “The markets will be hungry for any data suggesting the economy isn’t heating up any more than it did in the first quarter.”

A survey conducted by 22V Research shows that 30% of the investors polled think Friday’s jobs report will be “risk-on,” 27% expect a “risk-off” reaction, and 43% said “mixed/negligible.” Among the labor indicators, the tally showed investors will be paying the most attention — by far — to average hourly earnings. 

“Markets will likely still react more to a weaker print than strong data as investors have turned more hawkish,” said Oscar Munoz and Gennadiy Goldberg at TD Securities. “However, the recent string of upside surprises to economic data is unlikely to be sustained for long as expectations continue to reset higher.”

The options market is betting that stocks will swing widely after Friday’s US jobs report, which traders expect will offer more clarity on how much the Fed may cut interest rates this year.

The S&P 500 is expected to move 1.2% in either direction after the release, based on the cost of at-the-money puts and calls expiring Friday, according to Stuart Kaiser, Citigroup Inc.’s head of US equity trading strategy. That figure, based on the prices of S&P straddles as of Wednesday’s close, is the largest implied swing ahead of an employment report since March 2023, he said.

After Wednesday’s Fed decision to hold rates, the length of the current pause reached 280 days — which remains the second-longest on record, according to Ryan Grabinski at Strategas Securities. 

“Longer pauses have been constructive for equities,” Grabinski said. “The longest pause from June 2006 to September 2007 was associated with the best equity-market return. We are reaching the point where a Fed cut is probably more likely to mean issues are perking up.”

In Asia, data set for release includes Thai inflation and retail sales for Hong Kong and Singapore. 

Oil edged higher early Friday after ending the prior session little changed. Gold was also flat early Friday at around US$2,305 per ounce.