Asia Stocks Rebound as U.S. Data Eases Economic Worries

Asian shares rose on Thursday, recovering from a sharp selloff the previous day after strong U.S. economic data restored investor confidence. The upbeat figures boosted optimism about the global economy, while U.S. Treasury yields remained elevated, tempering expectations of an imminent Federal Reserve rate cut.

The U.S. services sector expanded at its fastest pace in eight months in October, driven by solid new orders and private payroll growth that exceeded forecasts with 42,000 new jobs. Analysts said the labor market remains resilient, supported by increased business investment in technology rather than new hiring. Keiko Kondo, head of multi-asset investments for Asia at Schroders, noted that companies are adapting rather than downsizing, reflecting a shift in labor market dynamics.

Wall Street rebounded overnight as investor concerns over inflated technology valuations subsided, with strong corporate earnings boosting risk appetite. In Asia, Japan’s Nikkei climbed 1.5% after a steep 2.5% decline, while South Korea’s Kospi surged over 2%. The MSCI Asia-Pacific index excluding Japan also gained 0.32%, signaling renewed market optimism after Wednesday’s heavy selloff.

Meanwhile, the 10-year U.S. Treasury yield hovered near 4.15%, while the two-year yield stood at 3.62%. Traders now see about a 60% chance of a Fed rate cut in December, down from 70% earlier in the week, as strong economic data continues to support the dollar.

In currency markets, the dollar dipped slightly to 153.86 yen, while the euro strengthened to $1.1507 and the British pound edged up to $1.3061 ahead of the Bank of England’s policy decision.

Oil prices also firmed slightly, with Brent crude at $63.55 per barrel and U.S. crude at $59.65, as market sentiment improved alongside equity gains.