Dow Jones & Nasdaq 100: Strong Asian Session Sets Tone for US Markets

Key Asian Market Movers: US Data Overshadows Japan Wage Surge

Crucial economic data from Japan fueled speculation about a potential Bank of Japan rate hike in the fourth quarter. Average cash earnings rose 4.1% year-on-year in July, sharply higher than June’s 3.1% increase. Overtime pay jumped 3.3% year-on-year (June: 0.5%).

Why do wage growth trends matter for traders?

Higher wages could boost consumer spending, fueling demand-driven inflation. A higher inflation outlook would support a more hawkish BoJ policy stance.

Meanwhile, household spending increased 1.7% month-on-month in July after tumbling 5.2% in June. Consumer spending trends suggested that wage growth is translating into higher consumption, a key factor for the Bank of Japan. USD/JPY fell 0.23% to 148.143 on the upbeat data.

However, market optimism about the Fed lowering interest rates in September overshadowed rising bets on a BoJ rate hike. Overnight, US labor market data signaled further cooling, potentially greenlighting a September rate cut. According to the CME FedWatch Tool, the chances of a 25-basis-point rate cut in September rose from 96.6% on Wednesday, September 3, to 99.3% on Thursday, September 4.

Nikkei 225 Leads Asian Market Gains

The Nikkei 225 advanced 0.87% to 42,951 in morning trading on Friday, September 5, despite a stronger yen. A stronger yen could exacerbate the effects of US tariffs on demand, affecting corporate earnings and pressuring share prices.

However, reports of the US planning to lower tariffs on Japanese autos contributed to the morning gains. Japan’s auto sector is key to trade terms. Lower tariffs may lift demand for Japanese autos, sending share prices higher. CN Wire reported:

“Japan top trade negotiator Akazawa: Lower auto tariffs will take effect within up to two weeks.”

Meanwhile, the Hang Seng Index climbed 0.50%, with Mainland China’s CSI 300 and the Shanghai Composite Index rising 0.59% and 0.10%, respectively. Markets steadied after Thursday’s sell-off, triggered by reports of Beijing considering easing short-selling restrictions among other measures.

Despite risk-on sentiment, gold edged 0.10% higher to $3,549, driven by expectations of lower US interest rates.

US Stock Futures Advance Ahead of Crucial US Jobs Report

Beyond Asia, US stock futures extended gains from the Thursday session. The Nasdaq 100 E-mini rose 63 points, the S&P 500 E-mini climbed 8 points, while the Dow Jones E-mini gained 13 points.

Upbeat sentiment during morning trading lifted US stock futures as the overnight US labor market data drove demand for risk assets.

Later today, the highly anticipated US Jobs Report is expected to fuel speculation about the Fed’s policy stance going into the fourth quarter.

Outlook: US Jobs Report Takes Center Stage

Later today, the US Jobs Report could trigger market volatility. Economists forecast higher unemployment, slower wage growth, and a modest upswing in nonfarm payrolls.

A deteriorating labor market could support multiple Fed rate cuts, fueling demand for risk assets. Conversely, better-than-expected figures may temper expectations of monetary policy easing in Q4, weighing on sentiment.

Looking ahead, August’s US CPI Report (September 11) will be the next key data release. Beyond the data, investors should closely monitor FOMC members’ speeches for views on the labor market, inflation, and monetary policy.

Technical Levels to Watch

Friday morning’s gains reinforced the short-term bullish bias. However, bullish momentum hinges on today’s Jobs Report. For traders, here are the key levels that could determine market direction in the coming sessions.

Dow Jones

• Resistance: August 22 high of 45,841, 46,000, then 46,500.
• Support: 45,000, then the 50-day EMA (44,623).

Nasdaq 100

• Resistance: August 18 high of 23,882, 24,000, then 24,500.
• Support: The 50-day EMA (23,147), and then 23,000.

S&P 500

• Resistance: August 28 high of 6,523 and then 6,750.
• Support: 6,400 and then the 50-day EMA (6,348).

With the US Jobs Report in sight, traders face a crucial session that could decide whether September remains the market’s toughest month. Follow our live coverage and consult our economic calendar.