BEIJING - Stocks rallied again in Asia on Friday, fired by renewed optimism that the Federal Reserve will hold off lifting interest rates next week as fresh data indicated further tightening in the US labour market.
Expectations the central bank will stand pat next week -- for the first time since starting its hiking cycle last year -- have pushed equities higher for most of the month, helped by the end of the US debt ceiling standoff.
Confidence was dealt a blow this week by the Bank of Canada's surprise lift and a similar move in Australia, causing concern on trading floors that the Fed will act after all.
But news of a forecast-busting jump in jobless claims for last week -- to the highest since October 2021 -- cemented the belief officials will pause until next month.
"The Fed is the price-setter here, the others are the price-takers, and we should not confuse the two," Evercore ISI's Krishna Guha said.
The Bank of Canada and the Reserve Bank of Australia "are raising rates in part because they think the Fed will hike once more and if they fail to match this they risk forex depreciation".
Thursday's figures came after last week's key non-farm payrolls data for May, which was taken as being healthy enough to suggest the economy was in good shape but weak enough to give the Fed room to hold fire for now.
HSBC's Ryan Wang said: "We expect the outcome at the June policy meeting to be a compromise: no change in the federal funds rate at this meeting but an emphasis that future rate hikes have not been ruled out."
All three main US indexes ended higher, with the S&P 500 entering a bull market after rising more than 20 percent from its October low.
Analysts said a pick-up in industrial stocks indicated a broadening of the rally while others said the United States could even avoid a recession, which many had feared would happen because of the surge in interest rates over the past year.
In early Asian trade, Hong Kong, Shanghai, Tokyo, Seoul, Sydney, Taipei, Manila and Jakarta were all in positive territory.
Singapore and Wellington dipped.