Asian stocks rose Thursday following gains on Wall Street in the previous session, boosted by weak U.S. jobs data that increased expectations for Federal Reserve interest rate cuts.

The MSCI regional index of Asian stocks climbed 0.5%, led by Japanese shares. Futures for the S&P 500 and Nasdaq 100 also rose after gains in the underlying indexes.

Australian bonds followed U.S. Treasury moves on Wednesday, with 10-year bond yields falling about five basis points to 4.37%.

Japanese stocks rose, supported by strong bank and technology shares, as the halt in rising global bond yields boosted sentiment. The rebound in U.S. tech stocks also bolstered the electronics sector.

Sony significantly contributed to the Topix index’s rise, increasing by 2.9%. Of the 1,677 stocks listed in the index, 1,019 advanced, 588 declined, and 70 remained unchanged.

Yutaka Miura, chief technical analyst at Mizuho Securities, said, “The selling pressure we saw yesterday due to rising long-term bond yields has eased, allowing investors to buy back stocks.” He added that the halt in yen selling, which weakened against the dollar Wednesday amid concerns over local political instability, also supports sentiment.

Bank shares, which fell Wednesday due to fears that Prime Minister Shigeru Ishiba’s unstable position might delay the Bank of Japan’s rate hikes, were among the biggest contributors to the Topix’s gains.

Miura said, “The rebound in large-cap U.S. tech stocks is also fueling buybacks.” The Nasdaq rose more than 1% Wednesday after falling in the previous two sessions. Tech stocks like Sony, SoftBank Group, and Advantest were strong, supported by positive flows in the U.S. However, with ongoing concerns about Ishiba’s fate, Thursday’s rise is likely a temporary rebound, Miura said. “Investors are not yet willing to take risks.”

With U.S. job openings falling to a 10-month low, traders now almost fully price in a Federal Reserve rate cut in September and expect at least two cuts this year. Investors are focusing on the important U.S. jobs report due Friday, after Fed Chair Jerome Powell said last month that “downside risks to employment are rising.”

Kyle Rodda, chief market analyst at Capital.com in Melbourne, wrote that the data “is another sign of labor market slowing. This dynamic strengthens the case for rate cuts.”

Economists expect about 75,000 jobs added in August, based on a Bloomberg survey average, with unemployment expected at 4.3%. Four consecutive months of job growth under 100,000 would be the weakest stretch since the pandemic began in 2020.

Two strategists at TD Securities, including Oscar Munoz and Gennady Goldberg, said, “Any big downside surprise in labor market data could sharply lower interest rates amid concerns about the Fed’s employment mandate.” They added, “We remain optimistic on the declines and expect rates to fall over the year.”

Fed Governor Christopher Waller told CNBC the central bank is expected to start cutting rates in September and make multiple cuts in the coming months, adding officials may discuss the exact pace of those cuts.

Alphabet and Apple Lift Nasdaq and S&P

The Nasdaq Composite and S&P 500 closed higher Wednesday after Alphabet shares jumped following a U.S. judge’s ruling in favor of Alphabet, Google’s parent company, amid investor optimism about Federal Reserve rate cuts this month.

The S&P 500 rose 31.41 points or 0.49% to 6446.95, the Nasdaq Composite gained 216.42 points or 1.02% to 21496.05, and the Dow Jones Industrial fell 33.64 points or 0.07% to 45262.17.

Alphabet shares rose after a late Tuesday ruling allowing Google to retain control over its Chrome browser and Android mobile operating system, while banning some exclusive contracts with device makers and browser developers.

Apple shares also rose as the ruling upheld lucrative payments from Google to the iPhone maker.

Jake Dollarhide, CEO of Longbow Asset Management in Tulsa, Oklahoma, said, “Google and Apple got a lifeline… they won the race… the courts just boosted their reputation.”