The overnight losses and risk-off sentiment set the tone for Friday’s Asian session.
US services PMI and job reduction claims in focus
US economic indicators also influenced market risk sentiment on Thursday. The ISM Services PMI rose to 54.9 in September from 51.5 in August, dampening expectations of aggressive Fed rate cuts to shore up the economy.
Additionally, initial unemployment claims increased slightly from 219,000 (week ending September 21) to 225,000 (week ending September 28). Despite the increase, jobless claims continued to point to a resilient US labor market, impacting the Fed’s interest rate path.
According to the CME FedWatch Tool, the probability of a 50 basis point rate cut fell from 35.2% (October 2) to 32.8% (October 3) in November. A less lenient Fed rate path could cause interest rates to be higher than expected, potentially impacting demand for riskier assets.
Expert views on the American labor market
Shane Oliver, head of investment strategy and chief economist at AMP, commented on the unemployment benefits data: to report,
“Initial US unemployment claims +6k, continuing claims -1k. Continues to suggest the labor market remains resilient – although other jobs figures are less positive.”