Hong Kong’s benchmark index and Japanese equities advanced. Australian shares recovered after initially paring gains on strong jobs data that bolstered the case for further interest rate hikes from the central bank. 

The dollar rose while the offshore yuan extended losses and the yen dropped to the lowest level since November. The weakness in the Japanese currency prompted a warning from chief cabinet secretary Hirokazu Matsuno that excessive movements weren’t desirable.

Treasury yields ticked higher. Australia’s sovereign yield curve inverted for the first time since the financial crisis as policy-sensitive three-year rates surged on the employment figures. 

The S&P 500 had gained just 0.1% on Wednesday after Fed chief Jerome Powell said nearly all Fed officials expected it would be appropriate to raise interest rates “somewhat further” in 2023. The Nasdaq 100 rose 0.7%, bringing its gain since the start of the year to 37%.

With a pause and hawkish outlook from the Fed widely anticipated, much of the focus in the Asian trading session is on China. The People’s Bank of China cutting its medium-term lending facility rate paves the way for banks to lower lending rates next week.

The PBOC’s move also forms part of broader stimulus efforts to support real estate and domestic demand. Data showing retail sales slowed more than expected in May added to worries about further slowing in China. Industrial production was also lower but met consensus forecasts. 

“They need a larger package, not just about the monetary policy or mortgage rate cut but also to restore the confidence of the private sector,” Raymond Yeung, Greater China Economist at ANZ Group Holdings, said in an interview with Bloomberg Television.

Economic troubles in New Zealand were also rippling through markets on Thursday, with the nation’s sovereign bond yields falling after gross domestic product data showed the country fell into a recession in the first quarter following an aggressive run of policy tightening.

Elsewhere in markets, oil extended a drop driven by a surprise jump in US crude stockpiles and the Fed’s hawkish outlook. DM