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(Bloomberg) — Asian equities were poised for gains on Friday after signs of resilience in the labor market lifted US stocks.

Equity futures for Japan, Australia and Hong Kong all rose by at least 1% with contracts for the Nikkei 225 rising more than 2.5%. On Wall Street, the S&P 500 had its best day since November 2022, while the Nasdaq advanced 3.1%.

The rally was driven by US jobless claims that showed fewer people applied for unemployment benefits than expected. The data alleviated concerns about the labor market after worse-than-expected jobs data on Friday last week fanned fears of recession that rippled through global markets.

“It has been quite a week,” said Liz Young Thomas at Social Finance Inc. “Up, down, and all around. We learned how sensitive markets now are to cooler US economic data, how broad reaching the impact of the yen carry trade can be, and how conditioned investors are to expect interest rate cuts as the salve for every scrape.”

Treasuries dipped across the curve Thursday — with the selloff led by shorter maturities. Bonds held their losses after a weak $25 billion sale of 30-year government debt. Swap traders further trimmed bets on aggressive Federal Reserve easing in 2024. Cryptocurrencies surged, with investors returning to riskier assets across financial markets. Australian government bonds fell early Friday.

The global repricing has been so sharp that at one point interest-rate swaps implied a 60% chance of an emergency rate cut by the Fed in the coming week — well before its next scheduled meeting in September. Current pricing suggests about 40 basis points of cuts for September.

Despite the expectations of imminent policy easing, there are some holdouts within the central bank itself. Federal Reserve Bank of Kansas City President Jeffrey Schmid signaled he’s not ready to support a reduction in interest rates with inflation above target, according to comments made on Thursday in the US.

In Asia, China inflation and producer prices are due, while money supply and new lending data could be released as soon as Friday. Markets are closed in Singapore.

Soft China inflation figures may fuel demand for government bonds, keeping yields near record lows, Bloomberg Economics noted, adding to speculation that the People’s Bank of China may continue to reduce rates to support the economy.

Oil fell to moderate a Thursday rally, against the backdrop of simmering tensions in the Middle East. Gold also inched lower after a gain in the prior session.

Meanwhile, steel and aluminum producers in Canada were urging Prime Minister Justin Trudeau’s government to swiftly impose new tariffs on Chinese products, saying metals from the Asian powerhouse are flooding the Canadian market and threatening local jobs.

US Moves

All major groups in the S&P 500 advanced, while the Russell 2000 of smaller firms added 2.4%. Nvidia Corp. led gains in megacaps. Eli Lilly & Co. soared on a bullish outlook driven by sales of its weight-loss drugs.

Still, Wall Street pros remain on edge about whether Monday’s selloff across global equities marked the worst of the correction — or if there’s still more to come.

“We are rallying today because of jobless claims!” Neil Dutta at Renaissance Macro Research said. “That’s unusual. If you get some downside surprises in the data next week, guess what happens? It will just fuel chatter back into the notion that the Fed is a bit behind the curve.”

While the recent stock-market rout flushed out some froth, US stocks remain at risk of more severe declines if growth continues to decelerate and the Fed “does not show urgency” in easing monetary policy, according to Dubravko Lakos-Bujas at JPMorgan Chase & Co.

Equities are no longer a “one-way upside trade, instead increasingly a two-sided debate on growth downside risks, Fed timing, crowded positioning, rich valuation, and rising election and geopolitical uncertainties,” Lakos-Bujas said.

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This story was produced with the assistance of Bloomberg Automation.