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Asia stocks gain on US growth as trade in focus
[SYDNEY] Asian stocks gained after US jobs data bolstered optimism in the world's largest economy, all but firming an interest rate increase from the Federal Reserve later this month. The dollar fell and Treasury yields ticked higher.
While shares rose in Japan, Australia, South Korea and Hong Kong, the shadow of a trade war may keep exuberance in check. China warned it will withdraw from commitments it made on trade if US President Donald Trump carries out a separate threat to impose tariffs on the Asian country, while the US is headed for a showdown with America's allies at a Group of Seven summit this week.
The US dollar pulled back after completing its seventh week of gains. The 10-year Treasury yields traded above 2.90 percent as investors turned their attention to the pace of Fed rate hikes.
The US jobs data was a welcome relief for traders after a tumultuous week dominated by fears about the prospect of another euro-area crisis. Much of that seemed to have dissipated as the week ended - in Italy, nationalist parties finally took power ending months of deadlock, while in Spain, the Socialist led-opposition ousted Spanish Prime Minister Mariano Rajoy with a no-confidence vote Friday.
With concerns about the euro area somewhat assuaged and emerging markets settling down after the recent sell-off, attention this week turns back to trade. The Group of Seven meets in Quebec later this week, with the European Union and Canada threatening retaliatory measures unless Trump reverses course on new steel and aluminum levies.
Elsewhere, West Texas Intermediate crude was little changed after declining as rising US output overshadowed a surprise drop in stockpiles, with traders also focused on whether Saudi Arabia and Russia will boost production.
In Europe, stocks had the largest gain in a month after Italy's populist parties grabbed power, ending a three-month political gridlock.