Asian markets uncertain after US jobs data fails to clarify interest rate hike outlook

Businessmen pass before a share prices board in Tokyo on Sept 2, 2015.
Businessmen pass before a share prices board in Tokyo on Sept 2, 2015. PHOTO: AFP

WELLINGTON ( Bloomberg News) - Uncertainty rippled through Asian financial markets Monday after United States jobs data failed to inject clarity into the interest-rate outlook before the resumption of trading in China following a holiday.

While U.S. index futures ticked up following a slump in New York Friday, contracts on equity gauges from Australia to Hong Kong signaled losses amid a jump in expected price swings. The Australian and New Zealand dollars lingered near six-year lows as oil extended its drop, while the yen held gains amid demand for the currency as a haven.

China worked to soothe concern over its economy at the Group of 20 gathering in Turkey at the weekend, with officials predicting stabilization in the currency and stock markets in the coming weeks. Friday's payrolls report showed that while wages and the number of hours worked increased last month, the U.S. added fewer workers than expected, leaving bets on a rate hike in September around 30 percent. International Monetary Fund chief Christine Lagarde emphasised that the Federal Reserve must be certain the U.S. can handle higher rates given the impact monetary tightening will have on the global economy.

"The overall tone of the data was certainly solid enough to leave the Fed in play later this month," Philip Borkin, a senior economist in Auckland at ANZ Bank New Zealand, said in a note to clients. "But to be fair, the Fed's decision of whether to hike or not is not really about the labour market, it hasn't been for a few months now. The main questions - and what is polarising markets and creating plenty of debate - are the outlook for inflation, the impact of tighter financial conditions and the state of the global economy. Financial market unrest obviously adds to the uncertainty and debate." China's Back Standard & Poor's 500 Index futures rose 0.3 per cent by 7:52 a.m. in Tokyo, after the mixed jobs figures sent the index down 1.5 percent ahead of a a three-day weekend in the U.S. Markets in Canada and Brazil are also shut Monday, while those in mainland China trade for the first time since Sept. 2 following holidays to celebrate the anniversary of World War II.

Futures on Australia's S&P/ASX 200 Index lost 0.6 per cent Friday, while those on the Kospi index in Seoul fell 0.5 percent and Hang Seng Index futures were down 0.9 per cent. Contracts on the Hang Seng China Enterprises Index, a gauge of mainland shares listed in Hong Kong, slid 1.3 per cent Friday, after the index ended the week down 6 percent.

Intervention in the market helped ease Chinese stocks into the two-day break, with the Shanghai Composite Index set to reopen at the same level it traded at Aug. 27. People's Bank of China Governor Zhou Xiaochuan said in a statement at the weekend that the rout in Chinese equities is close to ending, and that the state's actions prevented systemic risk by stopping a free- fall.

Japanese stock futures were more mixed, with yen- denominated contracts traded in Chicago up 0.5 per cent to 17,730 after sliding 3.2 per cent on Friday. Nikkei 225 Stock Average futures lost 1.3 per cent to 17,530 by 3 a.m. Saturday in Osaka. The yen, which typically moves at odds with Japanese shares, was little changed at 119.16 per dollar after Friday's 0.9 per cent advance delivered the currency a third straight weekly gain.

No War Elsewhere in foreign exchange markets, the Aussie strengthened 0.2 percent to 69.20 U.S. cents after sliding 1.6 per cent Friday and touching its weakest level since April 2009. The kiwi was little changed at 62.93 U.S. cents following a 1.8 per cent slump last session.

China's yuan gained 0.1 per cent in offshore trading to 6.4577 per dollar. G-20 leaders pledged to avoid a currency war in the wake of the yuan's devaluation, the first time they have used such language since 2013. Chinese Finance Minister Lou Jiwei told the meeting he expects Asia's largest economy to grow at a rate of about 7 percent over the next four or five years, according to an account on the PBOC's website.

West Texas Intermediate crude slipped 0.5 per cent to US$45.80 a barrel with all electronic transactions to be booked with Tuesdays for settlement purposes because of the Labor Day holiday in the U.S. WTI fell for a second day with Brent, which was down 0.5 percent to US$49.33 per barrel in London. Copper futures gained 0.4 percent on the Comex to US$2.3210 a pound, after sliding 3 percent on Friday amid a selloff in commodities.

Rate Bets Gold for immediate delivery was little changed at US$1,122.75 an ounce after three days of losses. Silver and platinum climbed at least 0.2 percent.

Odds the Fed will raise rates at their meeting next week are at 30 per cent, up from 26 percent before the payrolls data, though below the 48 per cent priced in before China's surprise yuan depreciation on Aug. 11. The devaluation roiled global markets and spurred stock volatility, erasing more than $7 trillion from equity values since then and whipsawing commodities to high-yielding currencies.

China will provide an update on its foreign-currency reserves Monday, providing investors with some idea of how much has been spent by regulators to shore up local markets and the yuan. Singapore and Indonesia also report on reserves, while Taiwan issues trade data.