Morning Market Brief | 4 Sep 2026

Asian Markets Rise Before US Jobs Report, Fed Comments Ease Rate-Hike Fears

Asian equities moved higher on Friday as investors positioned themselves ahead of the crucial US August jobs report.

The biggest shift came from Federal Reserve Governor Christopher Waller, whose comments reduced fears of an imminent US interest-rate hike and helped bonds recover, the US dollar weaken and the Japanese yen strengthen.

30-Second Market Snapshot

🇯🇵 Nikkei: +0.8%

🇨🇳 China blue chips: +1.0%

🇰🇷 Kospi: +1.1%

🌏 MSCI Asia ex-Japan: +1.0%

💵 US Dollar Index: 98.96

🇯🇵 USD/JPY: around 155.7

🥇 Gold: around US$4,470/oz

🛢️ Brent crude: around US$95.52/barrel

🇺🇸 US 2-Year Treasury Yield: 4.34%

🇺🇸 US 10-Year Treasury Yield: 4.76%

Big Story Today

Markets are becoming slightly less convinced that the Federal Reserve will raise interest rates in September.

Fed Governor Christopher Waller said signs of disinflation are beginning to appear and indicated he would favour keeping rates unchanged if upcoming economic data confirms that trend.

Markets subsequently reduced the probability of a September Fed rate hike to around 50%, from roughly 63% a day earlier.

What Happened?

① Asian shares rebound

Asian markets followed Wall Street higher, with major indices across Japan, China and South Korea gaining ground.

However, the rebound does not completely erase recent weakness.

The MSCI Asia-Pacific index excluding Japan remains around 0.4% lower for the week, while Japan's Nikkei is still down roughly 2.7% this week.

That suggests investors remain cautious despite Friday's improvement in sentiment.

② Fed's Waller cools rate-hike expectations

One of the biggest drivers of today's market movement came from Fed Governor Christopher Waller.

He said recent economic data showed signs that inflation pressures may be easing.

If upcoming reports confirm this trend, he would favour keeping interest rates unchanged at the Fed's September meeting.

That matters because markets had recently become increasingly worried that stubborn inflation could force the Fed to raise rates again.

Following Waller's comments, expectations for a September rate hike fell sharply.

③ US jobs report becomes the next major catalyst

Investors are now waiting for the August US non-farm payrolls report.

Economists expect approximately:

Jobs growth: +56,000

Previous month: -23,000

Unemployment rate: 4.1%

The report could significantly influence the Fed's next decision.

A moderately softer labour market could strengthen the argument for keeping rates unchanged.

But a surprisingly strong jobs report — particularly alongside persistent inflation — could revive expectations of another rate hike.

④ Yen strengthens as BOJ rate-hike expectations increase

The Japanese yen has gained around 2.6% this week, trading near ¥155.7 per US dollar.

Two factors are supporting the yen:

A weaker US dollar following softer Fed expectations, and increasing speculation that the Bank of Japan could raise interest rates.

Markets are currently pricing roughly a 75% probability of a BOJ rate hike in September, while an October increase is fully priced in.

This makes the yen one of the most important currencies to watch over the coming weeks.

⑤ Oil remains elevated amid geopolitical risks

Brent crude is trading around US$95.52 per barrel and has risen approximately 7% this week.

Markets remain concerned about geopolitical tensions involving the US and Iran and uncertainty surrounding the Strait of Hormuz.

Higher oil prices are important because they can increase global inflation pressures.

That creates a difficult situation for central banks.

Even if economic growth slows, persistent energy inflation could prevent policymakers from cutting rates — or potentially push them toward tighter monetary policy.

Why Does This Matter?

The key battle for markets right now is between:

Cooling economic growth

and

Persistent inflation.

Investors generally welcome signs that the Fed may avoid another rate hike because lower interest rates tend to support equity valuations.

Growth and technology stocks are particularly sensitive to changes in interest-rate expectations because lower discount rates increase the present value of their future earnings.

Bond markets can also benefit if expectations for further tightening decline.

But there is an important catch.

If US employment data becomes too weak, investors may stop celebrating lower interest rates and start worrying about recession risks.

At the same time, oil approaching US$100 could keep inflation elevated.

So the ideal scenario for markets would be:

Moderating jobs growth + easing inflation + stable economic activity.

Not:

Collapsing jobs + recession.

And not:

Strong inflation + another Fed hike.

Investment Impact

Assets and sectors that could benefit

1. Technology and growth stocks

Lower interest-rate expectations may support valuations, particularly for companies whose earnings are expected further into the future.

2. REITs and other yield-sensitive assets

Falling bond yields can improve the relative attractiveness of dividend-paying and income-producing assets.

3. Gold

Gold could remain supported if the US dollar weakens and expectations for higher US rates continue to decline.

4. Emerging-market assets

A weaker US dollar can sometimes improve capital-flow conditions for emerging markets.

5. Japanese yen

The combination of a weaker dollar and increasing BOJ tightening expectations could continue supporting the yen.

Areas that may face pressure

Banks

Lower interest rates can eventually place pressure on banking net interest margins, although the actual impact differs significantly between markets and individual banks.

US dollar

If expectations for Fed tightening continue to decline, the dollar could remain under pressure.

Consumer and cyclical companies

If weaker employment data begins signalling a broader economic slowdown, economically sensitive companies could face weaker demand.

 Energy-sensitive industries

Airlines, transportation, manufacturing and other fuel-intensive industries may face higher operating costs if oil prices stay elevated.

Malaysia Angle 🇲🇾

For Malaysian investors, there are several important implications.

① A weaker US dollar could support the ringgit

If markets continue reducing expectations for US interest-rate hikes, the interest-rate advantage of holding US dollars becomes less attractive.

That could potentially improve sentiment toward currencies such as the Malaysian ringgit.

A firmer ringgit could also reduce imported inflation pressures for Malaysia.

② Lower global yields could help REITs and dividend stocks

If US Treasury yields continue falling, yield-oriented Malaysian investments could become relatively more attractive.

This may place sectors such as:

REITs

Utilities

Telecommunications

High-dividend stocks

back onto investors' watchlists.

The effect will still depend on company fundamentals and domestic interest-rate expectations.

③ Higher oil prices have mixed implications for Malaysia

Malaysia is an oil-producing country, so higher energy prices can provide some support to petroleum-related revenues and selected oil & gas companies.

However, persistently high oil prices can also increase transportation and operating costs across the economy.

Investors should therefore distinguish between companies that benefit directly from higher energy prices and companies whose margins could be squeezed by higher fuel costs.

④ Asian sentiment could influence Bursa Malaysia

Improving risk appetite across China, Japan and South Korea can help overall regional sentiment.

If the US jobs report supports expectations that the Fed will pause, emerging-market equities could potentially see better investor flows.

For Bursa Malaysia, foreign fund flows will therefore be an important indicator to monitor.

What to Watch Next 

1. US August Jobs Report

The biggest market event today.

Consensus: approximately +56,000 jobs.

A softer-but-not-disastrous number could support equities and bonds.

A very strong number could revive Fed rate-hike expectations.

A very weak number could raise recession concerns.

2. Federal Reserve September Meeting

Markets currently see the probability of another rate hike at around 50%.

Upcoming labour and inflation data could change that significantly.

3. US Treasury Yields

Watch whether the US 10-year yield continues falling from around 4.76%.

Higher yields generally create more valuation pressure for equities.

4. USD/JPY

The yen has strengthened sharply.

Watch the 155 area, particularly with markets increasingly expecting BOJ tightening.

5. Brent Crude Oil

Brent is near US$95.5 after gaining around 7% this week.

A move toward US$100 could revive inflation concerns globally.

6. Gold

Gold remains near US$4,470/oz.

Further dollar weakness or falling Treasury yields could provide additional support.

7. Malaysian Ringgit & Foreign Fund Flows 🇲🇾

For Malaysian investors, watch whether dollar weakness translates into:

A stronger ringgit

More foreign buying of Malaysian equities

Improved sentiment toward REITs and dividend stocks

Bottom Line

Today's market rally is less about strong economic growth and more about reduced fears of another immediate Fed rate hike.

Waller's comments provided temporary relief to bonds, weakened the US dollar and helped Asian equities recover.

But the real test comes from the US jobs report.

For investors, the key question is no longer simply:

“Will the Fed raise rates?”

It is:

“Can inflation cool enough for the Fed to pause without the US economy falling into a recession?”

That balance could determine the next major direction for global equities, bonds, currencies and commodities.