Asia stocks rise as weak U.S. jobs dampen prospects of near-term Fed hike

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By Shinichi Saoshiro

Asian stocks rose early on Monday after the prospect of an imminent interest rate hike by the Federal Reserve faded after Friday’s weaker-than-expected U.S. employment data.

U.S. 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 1.6 percent. Australian shares rallied 1.7 percent, Hong Kong’s Hang Seng .HSI jumped 1.8 percent and South Korea’s Kospi .KS11 rose 1.2 percent.

“Risk aversion weakened today as a weak U.S. employment data supported expectations that the Fed would put off the timing of rates hike,” said Kim Young-jun, a stock analyst at SK Securities in Seoul.

Tokyo’s Nikkei .N225 climbed 1.2 percent. Chinese financial markets will be closed until Oct. 8 for national holidays.

Data released Friday showed U.S. non-farm payrolls rose by 142,000 in September, considerably lower than the 203,000 jobs the markets had expected. ECONUS

The lacklustre jobs report, which also showed a stall in U.S. hourly wage growth, fueled 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 risk 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 U.S. and will put the December meeting in doubt. The market reactions to the non-farm payrolls are unmistakable – 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 U.S. 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 95.714 after losing 0.4 percent overnight.

The dollar was little changed at 119.935 yen JPY=.

The euro rose 0.3 percent to $1.1245 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 U.S. 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 liftoff.”

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]

U.S. crude CLc1 rose 0.2 percent to $45.63 a barrel. They surged 1.8 percent on Friday on a report of a continuing decline in the U.S. oil rig count. Brent crude LCOc1 climbed 0.3 percent to $48.27 a barrel after it finished nearly 1 percent on Friday.

Gold stood tall after surging 2.2 percent overnight as the weak U.S. jobs data dented rate hike hopes and worked against the dollar. Spot gold XAU= was nearly flat at $1,137.66 an ounce. [GOL/]

(Additional reporting by Yeawon Choi in Seoul; Editing by Shri Navaratnam and Eric Meijer)

 

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