A negative adjustment in payroll statistics worried markets on Thursday, but overall gains were restricted as most Asian equities gained amid renewed optimism for lower U.S. interest rates.

Japan's services sector continued to rise, according to purchasing managers index data, which made Japanese equities the day's top performance by a wide margin. However, advances in the majority of other Asian countries were modest, and Chinese markets trailed.

The minutes of the Federal Reserve's late-July meeting revealed more officials in favour of an interest rate drop—further bets for a cut in September—and regional markets got a somewhat optimistic lead-in from Wall Street.

In Asian trading, U.S. stock index futures remained unchanged. However, statistics indicating a sharp downward adjustment in U.S. payroll data in the year ending in March 2024 dashed hopes for a rate decrease and raised worries that a sluggish labour market may trigger a probable recession in the largest economy in the world.

This week, the main event to watch is Fed Chair Jerome Powell's speech at the Jackson Hole Symposium on Friday.

The PMI statistics, which showed the services sector expanded strongly for a second consecutive month due to increased local demand brought about by rising salaries, improved sentiment towards Japan.

Even though the manufacturing PMI in Japan declined more than anticipated, overall business activity continued to rise.

The Bank of Japan may raise interest rates more this year as a result of the strength of the Japanese economy, which might be problematic for regional markets. However, this tendency should help equities that are exposed to local demand.

More economic hints are anticipated from Japan's consumer inflation data, which is scheduled for release on Friday.

Much smaller increases were seen by other Asian markets as fresh worries about a U.S. recession offset expectations for interest rate reductions.

With minimal indications of recovery, sentiment towards China declined by 0.3% and 0.1%, respectively, based on the Shanghai Shenzhen CSI 300 and Shanghai Composite indices.

Hong Kong's Hang Seng index rose 0.6%, aided by a recovery in heavyweight technology and e-commerce sectors, despite the index still suffering significant losses from the previous day.

(Sources: investing.com, reuters.com)