Asia stocks gain as US jobs data dampen prospects of Fed rate hike
TOKYO – Asian stocks rose on Monday as expectations for a US interest rate hike this year faded after weaker-than-expected employment data.
Spreadbetters forecast a higher open for Britain’s FTSE .FTSE, Germany’s DAX .GDAXI and France’s CAC .FCHI as investors slowly return to riskier assets.
US stock indexes jumped over 1 percent on Friday as worries about the economy after the disappointing jobs report gave way to a robust rally in energy and materials stocks.
Taking a lead from Friday’s Wall Street gains, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose to a 2-week high and was last up 1.7 percent.
Australian shares rallied 1.9 percent, Hong Kong’s Hang Seng .HSI jumped 1.8 percent and South Korea’s Kospi .KS11 rose 0.5 percent.
“Risk aversion weakened today as the weak US employment data supported expectations that the Fed would put off the timing of rate hikes,” said Kim Young-jun, a stock analyst at SK Securities in Seoul.
Tokyo’s Nikkei .N225 climbed 1.8 percent. Chinese financial markets will be closed until Oct. 8 for national holidays.
US non-farm payrolls rose by 142,000 in September, considerably lower than the 203,000 jobs the markets had expected, data showed on Friday. ECONUS
The lacklustre jobs report, which also showed a stall in US hourly wage growth, fuelled doubts that the economy was robust enough to withstand a rate hike before year-end.
The possibility of the Fed delaying the lift-off date for rates also meant its loose policy, which has helped shore up riskier assets globally by providing cheap cash, would continue a little longer.
The Dow .DJI and S&P 500 .SPX both gained more than 1 percent Friday after initially shedding more than 1.5 percent.
“The print will completely rule out this month for a rate rise in the US and will put the December meeting in doubt. The market reactions to the non-farm payrolls are unmistakeable – they see it as a trend and have recycled the 2012 to 2014 adage of ‘bad news is good news’,” wrote Evan Lucas, market strategist at IG in Melbourne.
Prices of safe-haven government bonds gained on the downbeat US jobs data, sending benchmark 10-year Treasury yields US10YT=RR to near 6-week lows on Friday. German Bund yields dropped to 4-month troughs and the 30-year Japanese government bond yield JP30YTN=JBTC slid to its lowest since late April.
In currencies, the greenback was on the defensive, with the dollar index .DXY nudged down 0.1 percent to 95.762 after losing 0.4 percent overnight.
The dollar was little changed at 120.00 yen JPY=.
The euro rose 0.2 percent to $1.1235 EUR= after climbing to as high as $1.1319 on Friday, a 10-day peak.
“In the near term, the greenback may be expected to remain partially on the defensive post-NFP,” strategists at OCBC Bank wrote.
“Instead of interpreting the disappointing US NFP numbers as symptomatic of the state of the global economy, investors have instead chosen to look upon the glass as half full, attaching positivity to prospects of a delayed Fed lift-off.”
Crude oil prices edged up on Monday after Russia said it was prepared to meet other producers to discuss the situation in the global oil market. [O/R]
US crude futures CLc1 rose 0.6 percent to $45.82 a barrel. They surged 1.8 percent on Friday on a report of a continuing decline in the US oil rig count.
Brent crude LCOc1 climbed 0.5 percent to $48.36 a barrel after it finished nearly 1 percent higher on Friday.
Gold stood tall after surging 2.2 percent on Friday as the weak US jobs data dented rate hike hopes and worked against the dollar. Spot gold XAU= was nearly flat at $1,135.71 an ounce. -Reuters