WELLINGTON (BLOOMBERG) - Asian stocks looked set to recoup some of last week's losses after strong United States jobs data reinforced confidence in the world's largest economy. The US dollar maintained gains.
Futures on equity gauges from Tokyo to Sydney foreshadowed advances of at least 0.5 per cent after the bigger-than-expected increase in American nonfarm payrolls spurred the steepest jump in three months for the Standard & Poor's 500 Index. U.S. crude oil has slumped below US$40 again after Opec opted not to impose a limit on output in order to ease pressure on prices amid a global glut.
"The post-payrolls rally in U.S. equities was notable," Kymberly Martin, a markets strategist in Wellington at Bank of New Zealand, said in an e-mail to clients. "The market appears to have read the data as reason for confidence in the economic outlook, rather than taking flight at the prospect of imminent reduction in U.S. Fed stimulus."
The 211,000-worker increase in payrolls was more than economists had predicted, cementing the view that the U.S. economy is strong enough to withstand the first interest-rate increase in almost a decade. Meanwhile, European Central Bank chief Mario Draghi tried to soothe investors disappointed by his move on economic support last week, signaling on Friday that the bank will add stimulus as needed.
The Bank of Japan's governor speaks Monday as the divergence in global monetary policy becomes more stark.
New Zealand's S&P/NZX 50 Index added 0.1 per cent as of 7:38 a.m. Tokyo time, the first major stock index in the Asian region to get going each day.
Futures on Australia's S&P/ASX 200 Index climbed 0.6 per cent in most recent trading, with the S&P 500 ending Friday up 2.1 per cent, amid a 370-point surge in the Dow Jones Industrial Average. In South Korea, Kospi index futures signaled gains of 1 percent.
Nikkei 225 Stock Average futures jumped 0.9 percent to 19,640 as of 3 a.m. Saturday in Osaka, while yen-denominated contracts on the gauge advanced the same amount Friday to 19,690. The yen, which typically moves at odds with Japanese stocks, was little changed Monday at 123.21 per US dollar after slipping 0.4 per cent Friday versus the greenback after the payrolls report.
In Hong Kong, futures on the Hang Seng Index were up 0.5 per cent in most recent trading, while those on the Hang Seng China Enterprises Index, which tracks mainland shares listed in the city, climbed 0.8 per cent. FTSE China A50 Index futures added 0.8 per cent Friday, after the Shanghai Composite Index capped its biggest weekly advance in a month.
The MSCI Asia Pacific Index slid 1.1 per cent on Friday, with equities from Japan to Hong Kong driving losses, after Draghi announced a deposit-rate cut and extension to his bond- buying program that fell short of what some traders had envisaged. The regional index slipped 0.8 per cent in the week, amid a 0.5 percent decline in MSCI's All-Country World Index.
Friday's headlines brought to an end three days of economic developments that will help shape the direction of markets into 2016 as the Federal Reserve prepares to boost borrowing costs, while central banks in Europe and Asia commit to expanding stimulus if necessary.
Odds of a Fed rate hike next week are at 74 per cent, according to futures trading monitored by Bloomberg, while only five of the 73 economists surveyed by Bloomberg are now predicting rates will be left on hold at the bank's last meeting of the year.
Fed officials will be hoping that given the consensus view, "any hike does not cause much in the way of market ruffles," Philip Borkin, a senior economist in Auckland at ANZ Bank New Zealand Ltd., wrote in a client note Monday. "But what the past week taught us is that when a view becomes "consensus," market positioning is an important thing to keep in mind. How the market reacts to a Fed hike still contains an element of uncertainty." China updates on its foreign-currency reserves Monday, while Australia posts on job advertisements. Taiwan and Sri Lanka report on trade and Thailand is closed for a holiday.
The euro was down 0.1 per cent early Monday to US$1.0875 after slipping 0.5 per cent amid the greenback rally last session. The Bloomberg Dollar Spot Index, a gauge of the U.S. currency against 10 major peers, climbed 0.4 per cent Friday as the dollar strengthened against more than half of its 16 major peers.
New Zealand's dollar was an outlier, gaining 0.9 per cent on Friday, even as its Australian counterpart meandered. The Reserve Bank of New Zealand reviews monetary policy Dec. 10, with most economists surveyed by Bloomberg projecting another cut in the benchmark rate. The kiwi was little changed at 67.41 U.S. cents Monday, and the Aussie was also steady at 73.38 U.S. cents.
Commodities West Texas Intermediate crude dropped 2.7 per cent Friday to US$39.97 a barrel, slipping below $40 for the second time in three days. Brent lost 1.9 percent to US$43 a barrel in London.
Friday's meeting of the Organisation of Petroleum Exporting Countries (Opec) extended from four hours into seven as members tossed aside the idea of limiting output to control prices. Instead, a daily production target of 30 million barrels - which countries have been breaching for the past 18 months - was set aside in favor of a Saudi Arabia-led policy of pumping until rivals are squeezed out of their market share. OPEC has set an output target almost without interruption since 1982, though members often ignored it.
"Lots of people said that OPEC was dead; OPEC itself just confirmed it," Jamie Webster, a Washington-based oil analyst for IHS Inc., said in Vienna.
U.S. crude has slumped almost 40 percent over the past year as a surplus of supply globally weighed on prices. A proposal Thursday from Venezuela for a 5 percent cut in OPEC's production went nowhere as Iran joined the ranks of members refusing to accept any curbs.
Gold for immediate delivery soared 2.3 per cent on Friday, despite the U.S. payrolls data solidifying prospects of a Fed rate hike this month. Prices climbed to $1,086.44 an ounce, capping their first weekly advance since mid-October, as traders speculated the pace of monetary tightening will be gradual.