Asia: Stocks set to bounce as payrolls weigh on yen; oil slips

[WELLINGTON] Asian index futures signaled gains, tracking a rebound in the US after weaker-than-expected jobs data damped odds of an interest-rate hike this month. The yen extended declines versus the dollar.

Futures on stock gauges from Sydney to Seoul foreshadowed increases of at least 0.6 per cent, while contracts on Japan's Nikkei 225 Stock Average jumped more than 1 per cent at the end of last week amid a rally in the S&P 500 Index.

The yen retreated for a second session on speculation the below-estimate US payrolls report will increase pressure on the Bank of Japan to further boost monetary stimulus. American crude swung back to losses after two key producers failed to offer details on their proposal to stabilise the market.

The jobs report was interpreted differently by various market players, with bulls cheering the fact US payrolls grew at a slower but solid pace in August, consistent with a steady improvement in the world's largest economy. Bears, however, said the moderation in wages just wasn't encouraging enough.

Analysts were split on whether the data gives officials the green light to boost borrowing costs in September for the first time since 2016, and odds on a move this month dropped to 32 per cent, down 10 percentage points from a week ago. Meanwhile, leaders of the Group of 20 nations are meeting in Hangzhou, China.

"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 Ltd, said in a research note, referring to payrolls.

"Our take is that the FOMC will continue to proceed cautiously, with a September rate hike a tad early."

Trading may be muted Monday, with markets in the US and Canada closed as are those in India for holidays. A raft of services industry purchasing managers' indexes are due, including Caixin's China gauge, while Japan reports on earnings and Taiwan on foreign reserves. BOJ Governor Haruhiko Kuroda is due to speak in Tokyo.

New Zealand's S&P/NZX 50 Index, the first major equity measure to start trading for the week, was little changed as of 8:08am Tokyo time, following last week's 0.5 per cent climb.

Futures on the S&P 500 gained 0.1 per cent, to 2,180.50, after the underlying index snapped a three-day drop Friday, rallying 0.4 per cent. Utilities and energy shares led the advance, which helped the S&P 500 up 0.5 per cent in the week.

American employers added 151,000 workers to nonfarm payrolls in August, below the 180,000 projected by economists. The increase came in the wake of a jump in July that was revised up to 275,000.

In Australia, futures on the S&P/ASX 200 Index signaled an increase of 0.7 per cent, after oil's 3 per cent rebound on Friday drove the Bloomberg Commodity Index up 1.1 per cent, halting a seven-day slide.

Futures on the Kospi index in Seoul climbed 0.6 per cent at the end of last week, while those on Hong Kong's Hang Seng and Hang Seng China Enterprises indexes rose at least 0.9 per cent. FTSE China A50 Index futures added 0.2 per cent on Friday.

Nikkei 225 futures were bid for 17,130 in the Osaka pre- market, up 1.1 per cent from where they closed at on Friday, while contracts traded in Singapore climbed 1 per cent to 17,100. Yen-denominated Nikkei futures were little changed at 17,000 on the Chicago Mercantile Exchange, after rising 1 per cent at the end of last week.

The yen, regarded as a haven currency, dropped 0.1 per cent to 104.03 per dollar after sinking 0.7 per cent on Friday, bringing its drop in the week to 2 per cent, the most since mid-July.

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, was little changed after edging up 0.1 per cent last session. The measure slid as much as 0.5 per cent after the payrolls data, before bouncing 0.2 per cent as traders digested the number.

"There's still interest-rate uncertainty, and once the Fed moves, it's not expected to go in rapid-fire succession," said Joe Manimbo, an analyst with Western Union Business Solutions, a unit of Western Union Co, in Washington. "The jobs report didn't meaningfully alter the dollar's outlook because December has been the base case all along."

The probability of the Fed moving at its last meeting of the year was 59 per cent on Friday, down from 65 per cent a week ago but up from 39 per cent a month ago, according to Fed funds futures tracked by Bloomberg.

Australia's dollar maintained gains, trading at 75.69 US cents after rising 0.3 per cent on Friday. China's yuan was steady at 6.6978 per US dollar in Hong Kong after slipping 0.2 per cent last session.

BLOOMBERG