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Asia: Futures signal gains while US dollar strengthens after payrolls

Monday, August 8, 2016 - 07:28
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[WELLINGTON] The US dollar cemented its advance, while Asian index futures signaled gains, after US jobs data both burnished sentiment toward the world's biggest economy and bolstered bets on an interest-rate hike this year. Gold extended its losses as oil edged higher.

The greenback climbed at least 0.2 per cent against the yen and the Australian and New Zealand currencies, after strengthening versus all three Friday on the bigger-than-estimated increase in American payrolls.

Futures on stock gauges from Japan to Australia foreshadowed gains, after banks and technology shares drove the S&P 500 Index to a fresh record high. Gold fell a second day as US crude nudged US$42 a barrel. Ten-year New Zealand government bonds opened lower after a selloff in Treasuries on Friday.

Odds on the Federal Reserve raising rates by the end of this year rose to 47 per cent after the jobs report, up about 10 per centage points from Thursday. Data showing improvement in the labour market, retail sales and industrial production have rebuilt confidence that the US economy can withstand pressure from faltering growth elsewhere.

China, where evidence of a slowdown rocked markets earlier in the year, releases a slew of data this week, with figures on trade due Monday. Australia and Singapore update on foreign reserves, while Japan posts reports the current account and lending.

"Risk appetite looks fairly robust," Chris Weston, chief market strategist in Melbourne at IG Ltd, said in an e-mail to clients.

"Momentum, once again, suggests being constructive on US equities despite many continuing to highlight that we have seen seven straight year-over-year declines in corporate earnings."

Stocks Futures on the S&P 500 rose less than 0.1 per cent as of 7:24 am Tokyo time, following a 0.9 per cent surge in the underlying gauge Friday, to 2,182.87.

New Zealand's S&P/NZX 50 Index, the first major equity benchmark to start trading for the week, was also steady, after retreating for the first time in six weeks last week.

Yen-denominated futures on Japan's Nikkei 225 added 0.3 per cent to 16,455 on the Chicago Mercantile Exchange, after contracts on the index traded in Osaka jumped 1.4 per cent to 16,430 at the end of last week.

In Australia, futures on the S&P/ASX 200 Index climbed 0.6 per cent in most recent trading, as those on the Kospi index in Seoul rose 0.5 per cent.

In Hong Kong, contracts on the Hang Seng Index signaled an advance of 0.7 per cent as those on the Hang Seng China Enterprises Index added 0.9 per cent. FTSE China A50 Index futures rose 0.1 per cent at the end of last week.

Payrolls climbed by 255,000 workers last month, following a 292,000 gain in June that was larger than previously estimated, according to US Labor Department data Friday, while the jobless rate held at 4.9 per cent.

The report came during a week that saw the Bank of England cut rates and unveil a stimulus package, while Japan and Australia took steps to shore up their economies.

"These are good numbers across the board," Darrell Cronk, president of Wells Fargo Investment Institute in New York said Friday.

"I don't think it brings the Fed back to the table for September but there are more people entering the work force, which is healthy. The story with these numbers is higher equity prices, higher yield and higher dollar."

Currencies

The yen, which typically moves at odds with Japanese stocks, weakened 0.2 per cent to 101.99 per US dollar, after sinking 0.6 per cent last session.

The Aussie slipped 0.2 per cent to 76.06 US cents, extending Friday's 0.1 per cent drop, while the Kiwi was down 0.3 per cent to 71.20 US cents, building on last session's 0.4 per cent decline.

All of the 16 economists surveyed by Bloomberg predict the Reserve Bank of New Zealand will step up stimulus this Thursday, cutting benchmark rates to a fresh record low, according to a Bloomberg News survey.

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, rose for a third day on Friday, climbing 0.3 per cent to its highest close since July 28.

BLOOMBERG