Hong Kong: Asian markets rose on Monday, spurred by strong US jobs data which raised optimism over the world’s top economy and gave the under-fire dollar much-needed support.
Regional equities started the week where the Dow left off Friday after the rosy employment figures had sent the US blue-chip index to an eighth straight record finish.
A solid daily advance in Tokyo was reinforced by the yen’s easing against the greenback and came after good earnings results, while Hong Kong also ended up.
Shanghai finished higher on higher commodity prices and as investors awaited data expected to show healthy trade growth. Jakarta was in positive territory despite figures showing Southeast Asia’s largest economy grew slower than expected in the second quarter.
In the US, the Labor Department reported on Friday the economy added more than 200,000 net new positions for the second straight month — well above forecasts — with the unemployment rate falling back to a 16-year low.
Analysts said the robust job creation figures coupled with rising wages could spur the Federal Reserve to raise the cost of borrowing a third time this year to keep a tight rein on inflation.
“The combination of stronger jobs and wages growth, a fall in the unemployment rate and an increase in the participation rate all scream a strong labour market,” said Greg McKenna, chief market strategist at AxiTrader.
“That, in turn, reinforces the Fed’s path back towards policy normalisation and suggests the tapering of the balance sheet will begin soon and more rate hikes are coming.”
The prospect of higher rates also helped lift the greenback off a 15-month low, with the US currency recovering on Friday against the yen and euro and holding the bulk of the gains in forex trade on Monday.
Continuing political turmoil in Washington has cast doubt on President Donald Trump’s stalled economic growth agenda and dragged the dollar down, and market-watchers warned the outlook for the dollar remains uncertain.
“Given typical August liquidity conditions, we could be in for a bumpy week as the market irons out if we’re in a short-term USD correction or a trend reversal,” said Stephen Innes, who heads Asia-Pacific trade at forex firm OANDA.
However, former World Bank president Robert Zoellick highlighted benign macroeconomic trends, saying all of the G20 nations were set for expansion.
“The broad-based nature of the world economy’s growth gives people some comfort,” he told Bloomberg Television.
Chinese trade figures out on Tuesday were expected to show exports rose 11 per cent in July from a year earlier, according to an economist survey.
Positive signs from the world’s two largest economies came as Washington and Beijing appeared to form a united front over North Korea, with both powers piling pressure on it on Sunday to abandon its nuclear missile programme after the UN Security Council approved tough sanctions.
Pyongyang denounced the measures as a “violent violation of our sovereignty”.
Europe’s main stock markets edged 0.1 per cent higher at the open in a subdued start to the week. — AFP
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