Asian Markets Poised for Rebound Amid US Economic Resilience

Asian equities are expected to open higher on Thursday, following a rebound in US stocks driven by strong economic data and easing inflation concerns. Futures for Japan, Australia, and Hong Kong indices climbed, with contracts for South Korea's Kospi index trading around 8% higher, indicating a potential recovery after a significant decline on Wednesday.

In the US, the S&P 500 rose 0.8% and the Nasdaq 100 gained 1.5% on Wednesday, supported by a rally in major technology companies. This uptick was bolstered by data showing the US service sector expanded at its fastest pace since mid-2022, while a price index reached a nearly one-year low, alleviating some inflation worries.

The dollar slipped 0.3%, and the yield on 10-year Treasuries increased by four basis points to 4.10%. Crude oil prices settled near $75 a barrel amid ongoing geopolitical tensions.

President Donald Trump expressed confidence in the military campaign against Iran, though the timeline for operations remains uncertain. Tehran dismissed reports of reaching out to the US for negotiations as "pure falsehood." China announced plans to dispatch its special envoy on Middle East affairs to the region for mediation efforts.

Despite the geopolitical uncertainties, economic strength and robust earnings suggest that any market pullback may be limited. Goldman Sachs Group Inc.'s Peter Oppenheimer noted that risk assets face significant headwinds from the war and concerns over artificial intelligence, but the overall economic resilience provides a supportive backdrop.

The Federal Reserve, after lowering interest rates three times in 2025, has held borrowing costs steady since January, citing above-target inflation and a stabilized labor market. Some policymakers have considered the possibility of raising interest rates if inflation remains elevated. The Labor Department is set to release its February jobs report on Friday, with fresh inflation data expected next week. The next Federal Reserve meeting is scheduled for March 17-18 in Washington.

In Asia, the weakening dollar supported a stronger yen, which rose to around 157 per dollar on Wednesday, alongside gains in the Australian and New Zealand currencies. Upcoming regional data includes inflation figures for the Philippines and Thailand, an interest rate decision in Malaysia, and Taiwan's industrial production. Additionally, China's National People's Congress is convening to unveil the new Five-Year Plan.

Elsewhere, gold edged higher, recovering some of the previous session's losses, as investors sought safe-haven assets amid market volatility. Bullion climbed as much as 2.3% on Wednesday before paring some gains, aided by a weaker dollar.

Corporate highlights include Morgan Stanley's plan to lay off approximately 3% of its workforce, or about 2,500 employees. Broadcom Inc. delivered a solid sales forecast and announced a stock buyback plan worth up to $10 billion, indicating its efforts to capitalize on AI spending are yielding results. Nvidia Corp. CEO Jensen Huang stated that the company's investments in OpenAI are not expected to reach the previously pledged maximum of $100 billion. Alphabet Inc.'s Google unveiled a new system for apps on its Android devices.

Market movements as of 7:19 a.m. Tokyo time include a 1.6% rise in Hang Seng futures and a 1.1% increase in S&P/ASX 200 futures. The Bloomberg Dollar Spot Index fell 0.3%, with the euro little changed at $1.1633 and the Japanese yen steady at 157.04 per dollar. The offshore yuan remained at 6.8943 per dollar, and the Australian dollar was unchanged at $0.7075. Bitcoin fell 0.2% to $73,227.45, while Ether rose 0.3% to $2,156.86. Australia's 10-year yield advanced four basis points to 4.78%, and spot gold was little changed.