Asia: Stocks poised for rebound on payrolls; oil back below US$40

[TOKYO] Asian stocks looked set to recoup some of last week's losses after strong US jobs data reinforced confidence in the world's largest economy. The dollar maintained gains.

Futures on equity gauges from Tokyo to Sydney foreshadowed advances of at least 0.5 per cent after the bigger-than-expected increase in American nonfarm payrolls spurred the steepest jump in three months for the Standard & Poor's 500 Index. US crude oil has slumped below US$40 again after Opec opted not to impose a limit on output in order to ease pressure on prices amid a global glut.

"The post-payrolls rally in US equities was notable," Kymberly Martin, a markets strategist in Wellington at Bank of New Zealand Ltd., said in an e-mail to clients. "The market appears to have read the data as reason for confidence in the economic outlook, rather than taking flight at the prospect of imminent reduction in US Fed stimulus." The 211,000-worker increase in payrolls was more than economists had predicted, cementing the view that the US economy is strong enough to withstand the first interest-rate increase in almost a decade. Meanwhile, European Central Bank chief Mario Draghi tried to soothe investors disappointed by his move on economic support last week, signaling on Friday that the bank will add stimulus as needed. Bank of Japan Governor Haruhiko Kuroda speaks Monday with the divergence in global monetary policy becoming ever more stark.

New Zealand's S&P/NZX 50 Index added 0.1 per cent as of 6:46 a.m. Tokyo time, the first major stock index in the Asian region to start trading each day.

Futures on Australia's S&P/ASX 200 Index climbed 0.6 per cent in most recent trading, with the S&P 500 ending Friday up 2.1 per cent, amid a 370-point surge in the Dow Jones Industrial Average. In South Korea, Kospi index futures signaled gains of 1 per cent.

Nikkei 225 Stock Average futures jumped 0.9 per cent to 19,640 as of 3 a.m. Saturday in Osaka, while yen-denominated contracts on the gauge advanced the same amount Friday to 19,690. The yen, which typically moves at odds with Japanese stocks, was little changed Monday at 123.20 per dollar after slipping 0.4 per cent Friday versus the greenback after the payrolls report.

In Hong Kong, futures on the Hang Seng Index were up 0.5 per cent in most recent trading, while those on the Hang Seng China Enterprises Index, which tracks mainland shares listed in the city, climbed 0.8 per cent. FTSE China A50 Index futures added 0.8 per cent Friday, after the Shanghai Composite Index capped its biggest weekly advance in a month.

China updates on its foreign-currency reserves Monday, while Australia posts on job advertisements. Taiwan and Sri Lanka report on trade and Thailand is closed for a holiday.

Friday's headlines brought to an end three days of economic developments that will help shape the direction of markets into 2016 as the Federal Reserve prepares to boost borrowing costs, while central banks in Europe and Asia commit to expanding stimulus if necessary. Odds of a Fed rate hike next week - at the bank's last meeting of the year - are at 74 per cent, according to futures trading monitored by Bloomberg.

Fed officials will be hoping that given the consensus view, "any hike does not cause much in the way of market ruffles," Philip Borkin, a senior economist in Auckland at ANZ Bank New Zealand Ltd., wrote in a client note Monday. "But what the past week taught us is that when a view becomes "consensus," market positioning is an important thing to keep in mind. How the market reacts to a Fed hike still contains an element of uncertainty."

BLOOMBERG