Asia: Stock futures pace US jump after payrolls; oil retreats

[WELLINGTON] Asian index futures tracked a bounce in US shares, after stronger-than-anticipated American jobs data soothed concern over the world's largest economy. Precious metals and copper futures climbed.

Stocks in New Zealand started the week higher, rising with contracts on Japan's Nikkei 225 Stock Average after the S&P 500 Index flirted with a record close on Friday.

The Australian dollar maintained gains as copper futures rebounded and gold traded near a two-year high with gold. The yen paused after four-day advance as Prime Minister Shinzo Abe's ruling coalition claimed victory in upper house elections. US crude oil swung back to losses, slipping to US$45.22 a barrel after rallying 0.6 per cent on Friday.

The S&P 500 erased losses incurred after the UK's shock vote to leave the European Union, as the 287,000-worker increase in nonfarm payrolls indicated the US economy was on a stronger footing than the previous month's figure had conveyed.

Economists had predicted a gain of 180,000 people following May's unexpectedly weak reading, which was revised down further to 11,000 on Friday. The data failed to boost the dollar, however, with bets on a US rate hike by the end of this year climbing to just 21 per cent. While two-year Treasuries fell, 10- year debt extended gains, sending yields to a record low.

"There is a large dichotomy between bond and equity markets and this will not last," Matthew Sherwood, head of investment strategy at Perpetual Ltd. in Sydney, which manages about US$21 billion, said in an e-mail to clients.

"Equities recovered their early Brexit losses as the attractiveness of yield plays increased, rather than the outlook for growth plays improved."

The Aussie was little changed at 75.65 US cents as of 8:01 am Tokyo time, after jumping 1.2 per cent on Friday amid a rally in higher-yielding assets.

After a week of political limbo, Prime Minister Malcolm Turnbull claimed victory in the country's July 2 election at the weekend, though it remains unclear whether he has enough seats to form a majority government.

Neighbouring New Zealand's dollar was steady at 73.04 US cents following a two-day surge of more than 2 per cent.

The yen slipped 0.1 per cent to 100.63 per dollar after gaining that amount on Friday to cap a weekly gain of 1.9 per cent. Mr Abe's upper house win will likely spur a switch in focus for investors, with the premier pledging to take "broad, bold" measures to support the economy at the beginning of last month.

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, was little changed after slipping 0.3 per cent on Friday despite the strong payrolls showing.

New Zealand's S&P/NZX 50 Index increased 0.3 per cent, advancing for the 10th time in 11 days.

Yen-denominated futures on Japan's Nikkei 225 Stock Average traded in Chicago rose 0.6 per cent to 15,430 Monday, after separate contracts added 1.5 percent as of 3 am Osaka time on Saturday, to 15,350.

Nikkei 225 futures in Singapore climbed 1.5 percent to 15,360 at the end of last week. In Australia, contracts on the S&P/ASX 200 Index climbed 1.2 per cent in most recent trading, while those on the Kospi index in Seoul rose 0.9 per cent.

The S&P 500 ended Friday up 1.5 per cent, after briefly rising above 2,130.82, its all-time closing high set in May last year. Futures on the U.S. benchmark were little changed at 2,120.25 early Monday.

Futures on Hong Kong's Hang Seng and Hang Seng China Enterprises indexes advanced at least 1.3 per cent as contracts on the FTSE China A50 Index added 0.5 per cent. The moves came before data at the weekend showed Chinese farmgate deflation eased in June for the sixth straight month, reducing pressure on policy makers to provide more stimulus.

Japan reports on machine orders and money stock Monday, while Australia issues data on lending. Indonesian markets resume following a one-week holiday.

West Texas Intermediate crude fell 0.5 per cent after slipping 7.3 per cent last week, while Brent was down 0.3 per cent early Monday to US$46.61.

Crude resumed losses after data from Baker Hughes Inc showed US drillers boosted the number of rigs targeting oil by 10 last week to 351, adding to a net 25 increase since the start of June.

Gold for immediate delivery climbed 0.4 per cent to US$1,372.23 an ounce, rising for the eighth time in nine days as silver gained 1.1 per cent, extending Friday's 3 per cent jump.

Copper futures due in September added 0.5 per cent to US$2.1290 a pound in New York, after falling for the past four days.

BLOOMBERG