Asian stocks traded within tight ranges on Friday as investors awaited Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole symposium this weekend, seeking guidance on future monetary policy.
Markets are closely watching for signals on the likelihood of a September rate cut, especially after recent data pointed to weakness in the U.S. labor market.
MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.1%, trimming monthly gains to 1.3%. Investors remain focused on whether U.S. tariffs will fuel inflation or slow economic growth, factors that could heavily influence interest rate decisions, according to OCBC’s Vasu Menon.
China’s CSI 300 index gained 1.8%, marking a third straight day of growth, with tech stocks leading the rally. The STAR 50 index surged nearly 8% after AI firm DeepSeek upgraded its flagship V3 model, while reports that Nvidia (NASDAQ:NVDA) asked Foxconn (SS:601138) to halt work on its H20 chip boosted Chinese rivals.
In Japan, the Nikkei 225 swung between gains and losses, ending 0.1% lower. Data showed core consumer prices slowed for a second month in July but stayed above the Bank of Japan’s 2% target, keeping rate hike expectations alive. The yen, however, weakened, heading for a 1% weekly drop. BOJ Governor Kazuo Ueda is also scheduled to speak at Jackson Hole.
The dollar index rose 0.2% to 98.796 after Fed officials expressed caution over near-term rate cuts. S&P 500 futures dipped 0.1%, extending Wall Street’s five-day losing streak.
Traders, who recently priced in strong odds of a September cut after weak payrolls and inflation data, pulled back slightly following Fed minutes. CME FedWatch now shows a 73.3% chance of a cut, down from 82.4% the day before. Analysts expect Powell to avoid offering firm signals ahead of upcoming U.S. jobs and CPI data, which could support further dollar strength.
Economic data from August showed stronger U.S. manufacturing orders, the fastest in 18 months. Still, jobless claims rose sharply, with continuing unemployment benefits hitting a four-year high, underscoring labor market strain.
In Europe, the euro slipped 0.2% to a two-week low at $1.1585 after the EU and U.S. unveiled details of a July trade agreement.
Oil prices steadied, with Brent crude up 0.1% at $67.73 per barrel, supported by signs of firm U.S. demand. Gold edged lower, with spot bullion down 0.3% at $3,329.40 an ounce.
