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Asia: Markets rally as US rate expectations fade

Monday, September 5, 2016 - 11:40
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[HONG KONG] Asian stock markets rallied on Monday as a slowdown in US jobs creation doused expectations for an interest rate hike this month while at the same time showing the world's top economy was still improving.

The much-anticipated reading on Friday showing 151,000 new posts in August was below expectations but indicated hiring remained solid.

Before its release analysts had marked the reading as a guide to the Federal Reserve's plans for monetary policy after the bank's boss Janet Yellen - and later her vice chairman Stanley Fischer - suggested a rate rise could come this year.

While most market-watchers suggested the below-par reading was likely to mean the Fed will hold off moving this month, there are still some who think a hike could still come soon, providing support to the dollar.

"Markets hardly took it as a bad number, with conjecture from both sides of the fence on what it means for the Fed," Cameron Bagrie, chief economist in Wellington at ANZ Bank New Zealand, said in a research note.

"Our take is that the (Fed policy committee) will continue to proceed cautiously, with a September rate hike a tad early."

In morning trade, the US dollar bought 103.94 yen from 103.99 yen in New York and sharply up from 103.60 yen in Asia earlier Friday.

The weaker yen lifted Japanese stocks, with the Nikkei ending the morning up 1.3 per cent.

Hong Kong added 1.6 per cent and Shanghai 0.5 per cent, while Sydney was 0.9 per cent higher. Singapore climbed 1.3 per cent and Taipei put on one per cent. There were also gains in Wellington and Jakarta.

In Seoul, the KOSPI rose 0.9 per cent but South Korea's biggest shipping firm Hanjin slumped 30 per cent at the open as its stock began trading again after being suspended on Tuesday as it filed for bankruptcy protection. It bounced back on bargain-buying almost immediately but was still four percent off by mid-morning.

The company made the filing as it groans under debts estimated at more than US$5 billion, the victim of a long-running downturn in the shipping industry caused by a struggling global economy.

The dollar dipped against higher-yielding currencies, with South Korea's won climbing almost one per cent, while the Indonesian rupiah and Malaysian ringgit also sharply higher.

However, oil prices retreated after talks between Russia and Opec kingpin Saudi Arabia at the weekend did not produce any plans on addressing a global supply glut.

While the two spoke of working to stabilise the crude market, dealers were disappointed with a lack of detail ahead of a producers meeting planned for this month in Algeria.

In morning trade West Texas Intermediate was down 0.8 per cent at US$44.09 and Brent shed 0.8 per cent to US$46.45.

AFP