Stock market today: Asian shares trade mixed ahead of a key US jobs report

TOKYO (AP) — On Friday, Asian stocks showed mixed trading as investors awaited a jobs report from the United States, due to be released later in the day.

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In morning trading, Japan's Nikkei 225 index increased by 0.6% to 32,820.80. Australia's S&P/ASX 200 index fell by 0.4% to 7,278.30. South Korea's Kospi index remained virtually the same, decreasing by less than 0.1% to 2,556.57. The Shanghai Composite index rose by 0.4% to 3,131.93.

Trading was suspended in Hong Kong due to an incoming typhoon. Schools and businesses were closed following an official warning about Super Typhoon Saola.

Later on Friday, the U.S. government will release employment data for August. The robust job market, coupled with consumer spending, has so far prevented a recession that analysts predicted would occur in 2023. However, this has made the Federal Reserve's job of controlling inflation more challenging by driving up wages and prices.

On Wall Street, the S&P 500 index surrendered an early gain to close 0.2% lower, falling to 4,507.66 on Thursday. The benchmark index finished August down 1.8%, although a recent four-day winning streak helped reduce the monthly decline's impact.

The Dow Jones Industrial Average dropped 0.5% to 34,721.91, while the Nasdaq composite barely gained 0.1% to 14,034.97.

Market unease over the potential for the Federal Reserve to maintain higher interest rates for a longer period — following reports demonstrating the U.S. economy's remarkable resilience — contributed to the market's retreat in August after a previously successful year.

This week, reports on job vacancies, consumer confidence, and inflation fueled Wall Street's hopes that the Fed might keep rates stable at its next policy meeting in September.

This helped to mitigate the market's losses for August. The S&P 500, which surged 19.5% through July, remains 17.4% higher for the year, while the tech-centric Nasdaq is up 34.1%. The Dow has increased by 4.8%.

Michael Antonelli, a market strategist at Baird, said, “We’ve kind of reached this point of the year where economic data and earnings are mostly set, in terms of the market’s expectations. But if we see cooler jobs data, cooler inflation data, if we see cooler spending data, that’s what brings rates down significantly and that boosts stocks higher. That’s kind of what we saw this week.”

On Thursday, the government reported that an inflation measure closely monitored by the Federal Reserve remained low in July. The most recent update for personal consumption and expenditures, or the PCE report, is the latest indication that price increases are slowing.

Since 2022, the central bank has aggressively increased its primary interest rate to the highest level since 2001. The aim has been to pull inflation back to the Fed’s target of 2%. In July, PCE measured 3.3%, aligning with economists' expectations. This is down from 7% a year ago.

The most recent inflation data follows updates on jobs and consumer confidence this week that also bolster hopes for the Fed to halt interest rate increases. The central bank kept rates stable at its last meeting, and investors anticipate rates to remain steady for the rest of 2023, according to CME's FedWatch tool.

The Fed has stated that it is prepared to continue raising interest rates if necessary, but will base its next steps on the most recent economic data.

Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said, “The last hike they made potentially could be the last for the year. As long as inflation remains controlled and contained, I think the Fed is done raising interest rates.”

Bond yields fell again on Thursday. The yield on the 10-year Treasury slipped from 4.11% late Wednesday to 4.10%. The yield on the 2-year Treasury, which tracks expectations for the Fed, edged lower from 4.88% late Wednesday to 4.85%.

In energy trading, benchmark U.S. crude rose 10 cents to $83.73 a barrel. Brent crude, the international standard, added 12 cents to $86.95 a barrel.

In currency trading, the U.S. dollar slightly fell to 145.44 Japanese yen from 145.52 yen. The euro was priced at $1.0845, virtually unchanged from $1.0846.

AP Business Writers Damian J. Troise and Alex Veiga contributed to this report.