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Asia markets rise as Fed comments and jobs data indicate rate cuts

Asian stocks rose in the early hours of trading on Thursday, as Federal Reserve officials' dovish remarks soothed investor nerves during a period when global growth concerns and bond market sell-offs were at an all-time high.

The Nikkei rose by 1.2%, and Australian shares gained 0.8% after their largest one-day drop since April.

MSCI's broadest Asia-Pacific share index outside Japan, which includes Japan and Australia, lost early gains before falling 0.2% in the last few days. Losses in China were a major factor. Bloomberg News reported that financial regulators were preparing cooling measures to cool the market. The Shanghai Composite dropped 1.6%, and was headed for a third consecutive day of declines.

The financial markets started September with a gloomy mood. A sell-off of longer-dated debts has dampened investor confidence in advance of Friday's crucial non-farm payrolls in the United States. A 30-year auction of Japanese government bonds will be held later today to test the appetite of global debt markets for super-long fixed income.

The bond market sold-off overnight, but the concern about the fiscal health in major economies, from Japan to Britain and United States, kept borrowing costs for long-term loans near their multi-year-highs.

Investors received a boost in confidence after Federal Reserve officials including Governor Christopher Waller expressed their support for rate reductions in the months to come.

Stephen Miran said that he would also work to maintain the independence of the Federal Reserve Board. He was selected by President Donald Trump to fill a vacant seat.

U.S. Stock Futures rose 0.1%, as investors reacted positively to the Fed's dovish remarks and bought beaten-down stocks.

Tony Sycamore is a market analyst with IG, Sydney. He said: "We had one or two weak days but dip-buyers stepped in." Many people see this September weakness as a good opportunity to buy, with the economy still growing strongly. "This is an excellent backdrop for equity markets."

The latest "JOLTS", or Job Openings Report, released on Wednesday showed that job openings were lower than expected. This boosted market bets for a rate reduction at the Fed meeting scheduled later in the month.

The Federal Reserve "Beige Book", which was released in September, painted a mixed image of the U.S. economy. This appeared to confirm the concerns of monetary policymakers. Analysts from ING described the report's tone as "bleak," and said that it "was littered with tariff warnings about prices."

According to CME Group’s FedWatch tool, traders are pricing in a 96% probability that the Fed will cut interest rates during its September meeting.

The yield on the benchmark 10-year Treasury note rose to 4,2226% from its U.S. closing of 4.211% Wednesday. The two-year rate, which increases with traders' expectation of higher Fed Funds rates, reached 3.6187%, compared to a U.S. closing of 3.612%.

The dollar was unchanged against the yen, at 148.13. It remained within the trading range that it has been in since August began.

The euro currency fell 0.1% to $1.1652, whereas the dollar index (which tracks the greenback's value against other major trading partners) rose 0.1% to 98.217.

Brent crude fell 0.5% on the commodities market to $67.29 per barrel.

Gold spot prices fell 0.8% to $3529.94 an ounce, after reaching a record high on Wednesday.

(source: Reuters)