Asia: Stocks climb after S&P 500 record as payrolls buoy US dollar

[WELLINGTON] Asian equities paced Friday's rally in the US, rising with oil as jobs data burnished sentiment toward the world's largest economy. The dollar cemented its ascent, while gold fell with government bonds after bets on an interest- rate hike this year increased.

Japanese shares led gains in the region as the greenback extended its advance against the yen following the bigger-than-estimated increase in American payrolls Friday.

Stocks in Sydney and Seoul also climbed after the S&P 500 Index rallied to a fresh record. The dollar strengthened versus the New Zealand dollar and the Korean won, while gold fell for a second day.

Ten-year Australian to Japanese sovereign debt declined as Treasuries extended losses from last session. US crude nudged US$42 a barrel, while nickel slipped.

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 last Thursday.

Data showing improvement in the labour market, retail sales and factory output 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 trade due Monday. The Asian equity benchmark slipped 0.5 per cent last week, driven to its first retreat since the start of July by Japanese losses.

"The lack of clarity because of US jobs data was one reason why last week's stock markets were weak," said Masaaki Yamaguchi, an equity market strategist in Tokyo at Nomura Securities Co.

"Since the results rose above both the 200,000 level and consensus forecasts, I expect markets to react positively."

The MSCI Asia Pacific Index added 0.7 per cent as of 9:48 am Tokyo time, led higher by industrial and consumer- discretionary shares.

Japan's Topix index jumped 1.6 per cent, after sliding 3.2 per cent last week, the most in a month.

The Kospi index in Seoul gained at least 0.4 per cent with Australia's S&P/ASX 200 Index, while New Zealand's S&P/NZX 50 Index rose 0.5 per cent, after retreating for the first time in six weeks last week.

Futures on the S&P 500 gained 0.1 per cent to 2,177.75, following a 0.9 per cent surge in the underlying gauge Friday, to 2,182.87.

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

The yen, which typically moves at odds with Japanese stocks, weakened 0.2 per cent to 102.06 per US dollar, after sinking 0.6 per cent last session.

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, climbed 0.1 per cent after rising for a third day on Friday, up 0.3 per cent to its highest close since July 28.

Payrolls increased 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."

The Kiwi was down 0.4 per cent to 71.18 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 won lost 0.5 per cent.

Australian bonds led the regional retreat, with 10-year yields spiking up nine basis points, or 0.09 per centage point, to 1.96 per cent. Rates on similar maturity Japanese, New Zealand and Korean debt rose at least four basis points.

Treasuries due in a decade yielded 1.61 per cent, up two basis points to extend Friday's nine basis-point climb.

The payrolls "report is universally strong and certainly increases the chances that Ms Yellen uses her Jackson Hole speech as an opportunity to reiterate the chances of another hike by year-end - whether they actually follow-through is another issue entirely," said Ian Lyngen, who along with David Ader was voted the top Treasuries strategists for 2016 in an Institutional Investor poll last month.

Fed Chair Janet Yellen speaks at the central bank's annual symposium in Jackson Hole, Wyoming on Aug 26.

Gold for immediate delivery fell 0.1 per cent to US$1,334.47 an ounce, extending Friday's 1.9 per cent slide on greater prospects of a Fed rate hike. Higher rates dim the appeal of the precious metal versus yield-paying assets. Silver also declined, falling at least 0.1 per cent with palladium and platinum.

West Texas Intermediate crude rose after falling on Friday, adding 0.4 per cent to US$41.97 a barrel, while Brent gained 0.3 per cent to US$44.39. Rigs targeting crude in the US rose by 7 to 381 last week, the highest level since March, Baker Hughes Inc said on its website Friday.

Nickel slipped 0.3 per cent in London, after jumping 1 per cent on Friday.

BLOOMBERG