Asian shares struggled to recover on Thursday with volatility remaining high, while emerging economy and commodity-linked currencies softened as investors worried about the global repercussions of slower growth in China. Japan's Nikkei rose for the first time in four days, gaining 0.7 percent. Many Asian bourses also advanced but weakness in Australia and falls in Asian currencies drove MSCI's dollar-denominated broadest index of Asia-Pacific shares outside Japan down 0.2 percent.
Bond guru Bill Gross, who has long called for the Federal Reserve to raise interest rates, said on Wednesday that U.S. central bankers may have missed their window of opportunity to hike rates earlier this year and doing so now could create "self-inflicted" instability. The Fed seems intent on raising the federal funds rate at its policy meeting this month if only to prove that it can begin the journey to normalization, said Gross, who runs the $1.5 billion Janus Global Unconstrained Bond Fund (JUCAX.O). "They should, but their September meeting language must be so careful," that "one and done" is an increasing possibility, Gross said.
U.S. labor markets were tight enough to fuel small wage gains in some professions in recent weeks, though some companies already were feeling a chill from an economic slowdown in China, the Federal Reserve said on Wednesday. Overall, U.S. economic activity continued to expand across most regions and sectors from July to mid-August, the Fed said in its Beige Book report of anecdotal information on business activity collected from contacts nationwide. The combination of a healing labor market and worries about Chinese economic growth underscored the challenge faced by the U.S. central bank as it mulls raising interest rates as soon as this month.