MSCI’s broadest index of Asia-Pacific shares outside Japan gained 1 per cent

Asian shares rose on Friday as investors embraced a rally, while bonds found some much needed relief.

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 1 per cent but that was not enough to offset earlier ‌losses with the index still down 0.4 per cent for the week.

Nikkei added 0.8 per cent but was down 2.7 per cent this week. Chinese blue-chips rallied 1 per cent and KOSPI rose 1.1 per cent.

Wall Street futures were flat as traders braced for the US payrolls report for August due later in the day. Forecasts are centred on a rise of 56,000 jobs after a shock fall of 23,000 the previous month. The unemployment rate is expected to hold steady at 4.1 per cent.

The dollar’s retreat turbocharged a rally ​in the yen, which has added 2.6 per cent this week to trade at 155.7 a dollar, putting it ​within striking distance of the 155.2 level reached after intervention by authorities in late July.

Futures were quick to scale back the chance of a rate hike this month to just 50 per cent, from about 63 per cent a day ago. Those expectations had surged in recent sessions as an international bond rout drove long-dated yields to multi-year highs, fuelled by concerns over stubborn inflation, swelling government debt and geopolitical tensions.

Waller is pushing back against the thrust of the argument made by Warsh last week that there is little evidence that underlying inflation has moved lower, said analysts at JPMorgan in a note.

They said: We believe that Chair Warsh will deliver a hike if he advocates for it. Absent his advocacy, Governor Waller’s speech reinforces our view that the bar for data to sway the data-dependent majority to hike this month remains elevated.