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Gold nears record high after Fed rate-cut bets. Tech shares lead Asia share rally

Tech shares rose on Thursday, driving Asia's stock indexes to new heights, while gold hovered at a record-high and the dollar sank after a weak U.S. Labour Market Report boosted bets that Federal Reserve rates would be cut.

It was almost certain that the U.S. shutdown would prevent the release of vital monthly payrolls on Friday. However, overnight, the ADP private employment report revealed the unexpected loss of jobs in September. The prior month had also been revised downwards.

Even without official labour data, traders priced in Fed rate cuts of a quarter point at each of two remaining policy meetings this year.

Wall Street reached new record highs Wednesday as the promise of a more relaxed policy environment was cited. The Philadelphia SE semiconductor index also rose by over 2%.

The Nikkei gained more than 1% despite a stronger dollar and yen.

Taiwan's tech heavy bourse, the Taiwan Stock Exchange, jumped by 1.8%. South Korea's KOSPI soared 2.8% following the signing of a partnership between chip giants Hynix and Samsung to supply OpenAI Data centres. Hong Kong's Hang Seng rose 1.6%.

The STOXX Europe 50 futures point to a 0.5% increase.

According to Kyle Rodda of Capital.com, the ADP report suggests that "the U.S. economic situation is so dire, it requires further policy support." As a result, markets discount a higher probability for rate cuts in December and October.

He added that "after initial jitters the markets have shrugged off the U.S. Government shutdown, at least until now."

Rodda stated that the shutdowns have historically had a minimal impact on the economy, but the delay in critical economic data may increase uncertainty regarding the future of U.S. monetary policies and thus raise volatility.

As a result of deep partisan differences, Congress and the White House were unable to reach a funding agreement, which could lead to a long, bitter standoff.

Fed easing bets, along with some shutdown anxiety, pushed gold overnight to a new all-time record of $3,895.09, and also supported U.S. Treasuries by sending yields dramatically lower.

On Thursday, during Tokyo's trading hours, the yield on two-year Treasury bonds fell to its lowest level in two weeks at 3.531%.

The last time gold changed hands was around $3,866.

Michael Brown, Senior Research Strategist at Pepperstone, said: "As it is usually the case, new highs will likely beget more fresh highs. The momentum remains firmly with bulls and the fundamental argument for further upsides in PMs (precious Metals) is also a strong one."

The U.S. Dollar Index, which measures the currency's performance against six major counterparts, remained near the overnight low of 97.459, a one-week low. The index last stood at 97.731, unchanged from the closing level of Wednesday.

After a three-day decline of 1.8%, the dollar was unchanged at 147.21yen.

The euro slightly rose to $1.1734 while the sterling fell to $1.3470.

The oil price rose as a result of the prospect of tougher sanctions against Russian crude. This was an attempt to end a losing streak that lasted three days and brought it down to its lowest level in 16 weeks.

Brent crude futures rose 0.7%, to $65.78 per barrel. U.S. West Texas Intermediate crude also gained 0.7%, to $62.20 per barrel.

(source: Reuters)