Asian equities rebounded on Thursday, reversing a steep selloff, as stronger-than-expected U.S. economic data, including robust services sector activity and private payrolls, bolstered investor confidence and risk appetite. This positive data led traders to further trim expectations for a Federal Reserve rate cut next month, supporting U.S. Treasury yields and maintaining the dollar near a five-month peak. While some concerns about stretched valuations persist, the market's immediate focus has shifted to resilient U.S. economic performance and corporate earnings.
Asia shares rebounded sharply on Thursday, reversing a steep selloff, driven by stronger-than-expected U.S. economic data. U.S. services sector activity reached an eight-month high in October, with robust new orders and private payrolls exceeding expectations by 42,000, which also lifted Wall Street and restored investor risk appetite. This robust U.S. data led traders to significantly trim expectations for a Federal Reserve rate cut next month, with the probability for a December cut now at approximately 60%, down from 70%. Consequently, U.S. Treasury yields held overnight gains, with the 10-year yield at 4.1474%, and the dollar remained supported near a five-month peak. Regional markets reflected this shift, with Japan’s Nikkei climbing 1.5% and South Korea’s Kospi jumping over 2%, recovering from previous session declines. While an analyst noted the market is "still quite healthy" but "due for a pullback," lingering concerns about stretched valuations, which triggered Wednesday's selloff, remain a background factor. The U.S. Treasury Department's consideration of future increases in auction sizes adds upward pressure on long-term yields.
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