Asian stocks set to track U.S. gains but Hong Kong jitters weighAsian stocks set to track U.S. gains but Hong Kong jitters weigh
A man wearing a protective face mask talks on his mobile phone in front of a screen showing the Nikkei index in Tokyo

By Imani Moise

NEW YORK (Reuters) – Asian stocks were set to track Wall Street gains on Thursday as investors cheered signs the global economy was emerging from its coronavirus hibernation although trade is likely to be choppy as fresh concerns about Hong Kong keep investors cautious.

Also adding to market apprehension is June U.S. employment data due later in the day, which will show if the world’s largest economy can sustain its fragile recovery as new COVID-19 cases accelerate in several southern states.

E-mini futures for the S&P 500 <EScv1> edged 0.06% higher, while Australian S&P/ASX 200 futures <YAPcm1> climbed 0.71% and Japan’s Nikkei 225 futures <JNIc1> rose 0.4%.

Economists polled by Reuters expect private employers to show 2.9 new million new jobs June, which would follow a surprise increase in May. Casting some doubt over that projection, however, was a smaller-than-expected increase in jobs seen in the ADP report on Wednesday.

“The weaker than expected ADP report suggests some downside risk to consensus,” said Joseph Capurso, head of international economics at Commonwealth Bank of Australia.

Wall Street shrugged off the miss and ended Wednesday trading higher after key economic indicators showed a rebound in Chinese manufacturing activity as it recovers from the pandemic and sharp declines in European factory activity eased.

In Hong Kong, Hang Seng index futures <.HIS> <HSIc1> lost 0.42%. Markets in the Asian financial hub were closed on Wednesday, the same day police in the city arrested more than 300 people protesting sweeping new laws introduced by China to snuff out dissent.

Those developments have raised concerns about China’s already strained relations with its major western trading partners, particularly the United States.

The U.S. House of Representatives passed legislation on Wednesday that would penalize banks doing business with Chinese officials who implement a national security law.

On Wall Street, however, the focus was on positive data. The MSCI’s gauge of stocks across the globe <.MIWD00000PU> gained 0.45% and the S&P 500 <.SPX> rose 0.50%.

The increase in manufacturing activity also propelled oil prices higher in anticipation of increased demand while gold and the dollar fell as the encouraging reports caused investors to take on more risk.

Brent crude <LCOc1> rose 76 cents, or 1.8%, to settle at $42.03 a barrel. U.S. crude <CLc1> rose 55 cents, or 1.4%, to settle at $39.82 a barrel.

The improved sentiment weighed on the safehaven greenback with the dollar index <=USD> down 0.265% and the euro <EUR=> up 0.03% to $1.1253.

The Japanese yen strengthened 0.05% to 107.42 per dollar, while sterling <GBP=> was last trading at $1.2477, up 0.06% on the day.

U.S. gold futures <GCcv1> settled 1.1% lower, at $1,779.90.

U.S. Treasuries were weighed by the positive economic data and Federal Reserve meeting minutes, which signaled yield curve control was not coming anytime soon.

The benchmark 10-year <US10YT=RR> yield was last up 2.9 basis points at 0.6824% on Wednesday.

(Reporting by Imani Moise; Editing by Sam Holmes)