Asian stock markets climbed on Thursday, bolstered by Wall Street’s dramatic late-day rebound, even as uncertainty continued to swirl over the economic fallout of US President Donald Trump’s tariff policies.
Investors remained cautious, with many Asian markets closed for the Labour Day holiday and attention fixed on Friday’s upcoming US job report.
Japan’s Nikkei 225 rose 0.9 per cent to 36,359.24 after the Bank of Japan left its benchmark interest rate unchanged, a move widely expected amid growing unease over the impact of Trump’s trade war.
The Australian S&P/ASX 200 edged up slightly to 8,137.40. Trading volumes remained light across the region.
Wednesday had seen Wall Street recover strongly from an early slump, with the S&P 500 reversing a 2.3 per cent drop to close 0.1 per cent higher at 5,569.06, extending its winning streak to a seventh day.
The Dow Jones Industrial Average gained 0.3 per cent to 40,669.36, while the Nasdaq dipped 0.1 per cent to 17,446.34. According to AP, fears of a US recession were reignited after data showed the economy shrank by an annualised 0.3 per cent in Q1 2025, driven by a surge in imports as companies raced to beat the April 2 tariff deadline.
President Trump brushed aside the negative economic signals, saying, “I’m not taking a credit or discredit for the stock market,” adding, “We inherited a mess.” He has continued to blame the downturn on former US President Joe Biden, despite mounting investor anxiety over his own unpredictable tariff policy.
Markets were initially rattled by the poor GDP numbers, but sentiment improved after inflation data offered some relief. The Fed’s preferred inflation gauge slowed to 2.3 per cent in March from 2.7 per cent in February, easing pressure on the central bank and raising hopes for potential rate cuts.
As per news agency AP, if inflation continues to cool, the Federal Reserve may have greater room to act to support growth.
However, the job market, a key pillar of economic resilience, showed signs of strain. Private payroll data from ADP indicated hiring in April may have been much weaker than anticipated, which only intensified fears of “stagflation,” a scenario where inflation stays high even as growth falters.
Meanwhile, the Bank of Japan kept its key interest rate steady at around 0.5 per cent for the second straight meeting but downgraded its GDP forecast for fiscal 2025 from 1.1 per cent to 0.5 per cent, citing global uncertainties linked to US trade actions.
“Strong earnings from US IT firms like Microsoft and Meta helped lift sentiment,” said Nomura strategist Takashi Ito to Bloomberg, pointing to the electronics sector as a possible driver of further gains.
Investors now await Friday’s US jobs report, which will offer the first full snapshot of labour market health following Trump’s wide-ranging tariffs earlier this month.
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