Hong Kong: Asian stocks made modest gains on Monday after better-than-expected US jobs data raised hopes the United States can lead the world out of recession, but Asian currencies were kept in check by a fluctuating US dollar.
The US jobs report on Friday, which showed fewer-than-feared job losses in July and a surprise dip in the unemployment rate, underpinned equities across Asia.
Shares in Japan reached a 10-month closing high as the US jobs data encouraged investors, but Japanese manufacturers forecast a sixth straight quarterly fall in machinery orders in July-September, a leading indicator of capital spending. That led some economists to suggest that the Bank of Japan’s view that the economy will improve later this fiscal year was too rosy.
“If final demand continues to be very weak and if it is difficult to see when companies will recover, then it will take a long time for the BOJ to seek an exit strategy, including normalising interest rates,” said Junko Nishioka, chief Japan economist at RBS Securities in Tokyo.
Major European stock futures were down 0.4% while US equity futures were 0.07% lower.
The MSCI Index of Asia-Pacific stocks outside Japan was up 0.5% but still off 11-month peaks seen last week. The index has surged 78 percent since a rebound in global equities began on 9 March.
Shares of Japanese resin maker Mitsubishi Rayon soared 19.8% on a report the company would be acquired by Japan’s largest chemical company Mitsubishi Chemical Holdings, which jumped 4.7%.
Japan’s top tyre maker Bridgestone posted a second-quarter operating loss but its shares surged 5.6% as the company raised its full-year profit forecast.
In Australia, a rise in demand for home loans in June for a ninth straight month reinforced the view that a strengthening housing market is driving economic recovery. The benchmark S&P/ASX 200 index was flat but coal shares rallied on a likely takeover of Australian coal miner Felix Resources Ltd by China’s Yanzhou Coal. Those shares were suspended.
Shares in global commodities miner Rio Tinto Ltd, however, fell 3.3% after China stepped up its espionage allegations against the company.
The US dollar fluctuated after jumping more than 1% on Friday on the jobs data. The dollar index, which measures the U.S. currency against a basket of others, was 0.11% lower at 78.976.
While the jobs data has led to speculation US interest rates may rise as soon as later this year, analysts expect the US Federal Reserve to dampen talk of an early rate rise after its two-day meeting ends on Wednesday.
“If interest rates were to rise in this situation, that may pour cold water on the recovery,” said Hiroshi Maeba, deputy managing director of forex trading at Nomura Securities in Tokyo.
Those expectations put pressure on US Treasuries while Japanese government bonds were depressed by the rise in Japanese stocks.
Oil prices meanwhile recovered from an early morning slide to regain $71 but were subdued after OPEC President Jose Botelho de Vasconcelos, signalled on Sunday that oil producers were unlikely to cut output when they meet next month, saying prices were not bad at current levels.
Investors will be looking for more clues on the US economic outlook in a flood of reports this week including chain store sales on Tuesday, US trade data for June on Wednesday and July retail sales on Thursday. July consumer prices, industrial production and consumer sentiment for August will all be released on Friday.
Amid persistently weak consumer demand in major Western markets, many export-reliant Asian economies have pinned their hopes on a rapid recovery in China.
Chinese Premier Wen Jiabao said over the weekend that fiscal and monetary stimulus would remain in place, amid some concerns that asset bubbles may be forming as economic growth snaps back.
Expectations that a barrage of economic data out of China on Tuesday will affirm the world’s third-biggest economy is on a firm recovery path helped Hong Kong’s Hang Seng Index, which was up 2.1%. But investors in mainland China were cautious and shares in Shanghai closed down 0.3%.