Singapore: Asian stocks rose on Monday and the dollar firmed after data showed US employers created jobs last month at the fastest pace pace in three years, boosting investor confidence and hopes of a sustained economic recovery.
US S&P 500 stock index futures rose 0.5% in Asian trading after the job report, topping an intraday peak in an abbreviated futures session on Friday.
Most cash markets in the US and Europe were closed for the Good Friday holiday when the jobs data was released.
But trading in Asia was lighter than usual, with markets in Australia, China, Hong Kong, Taiwan and New Zealand closed for holidays.
US nonfarm payrolls rose 162,000 in March, the largest since March 2007, and only the third time payrolls have increased since the recession hit in late 2007, the strongest signal yet that its economic recovery is on solid footing and needs less government help.
The unemployment rate, however, held steady at 9.7% for a third straight month, the Labor Department said on Friday.
Economists had expected nonfarm payrolls to rise 190,000 last month, but they said a solid rise in private-sector hiring gave the report a stronger-than-expected tone.
Japan’s Nikkei rose 0.9% to 11,386.13, after climbing as high as 11,408.17, a fresh 18-month peak, as automakers such as Honda Motor and Toyota Motor continued to rise following a jump in U.S. auto sales in March.
The Nikkei also drew support from the yen’s fall last week to a seven-month low against the dollar.
The dollar rose as high as 94.78 yen on trading platform EBS in early Asian trade, the highest since late August 2009, before trading at 94.56 yen, nearly flat from midday trading in New York on Friday.
A fall in the yen can help Japanese exporters as it makes their products more competitive and can increase their overseas profits when repatriated back home. But analysts said further gains could be limited by worries that the Nikkei may have rallied too far, too fast.
The Nikkei 225’s relative strength index is now reading 87. Numbers above 70 indicate a market has been overbought.
“Concerns that the market may be overheated are likely to linger,” said Masayuki Doshida, market analyst at Matsui Securities.
The MSCI’s broad measure of shares in the Asia-Pacific excluding Japan edged up 0.2%
Indonesian stocks rose more than 1% to a record high of 2,874.43, taking its gains to nearly 13% so far this year as foreign investors snap up Indonesian stocks and bonds on strong economic growth prospects.
But South Korea’s KOSPI fell 0.3%, easing from a 21-month high hit on Friday.
The dollar extended gains against the yen on the generally upbeat jobs data.
Traders said climbs in long-term Treasuries yields after the jobs report, with the benchmark 10-year yield rising to a 9-month high near 4%, also boosted the dollar’s yield appeal compared to the low-yielding yen.
Some economists said relatively strong details of the nonfarm payroll report suggested the Federal Reserve could raise interest rates as early as late this year, which would further increase the yield appeal of the dollar. The central bank had slashed them to near zero during the global financial crisis to spur growth.
A solid rise in private-sector hiring also led some traders to believe the Fed may raise its discount rate again at a meeting later on Monday, but most analysts doubted it would make such a move so quickly.
The Fed surprised markets on 18 February when it hiked the discount rate, the emergency rate at which it lends to banks, by a quarter point to 0.75%.
The yen was under broad selling pressure with euro hitting a 10-week high and the Australian dollar striking a 18-month peak in holiday-thinned early Asia trade.
“The dollar looks already high enough against the yen to take profits,” said a senior trader at a Japanese bank.
“But the currency’s strength since Friday without a major corrective move down suggests that it may stay on a firm footing at least until the market sees the result of the Fed meeting today,” the trader said.
Markets were also watching for news on the yuan after signals of a thaw in frosty relations between Washington and Beijing raised expectations that China may unshackle the yuan from its de facto 20-month-old peg and let it appreciate against the dollar and other major currencies in the months ahead.
US Treasury Secretary Timothy Geithner has said he will delay an 15 April report that could have branded China a “currency manipulator”, following Beijing’s announcement that President Hu Jintao will attend a nuclear security summit in Washington on 12-13 April.