Asia stocks extend gains as US jobs trump virus worries

An electronic stock quotation board in Tokyo on June 26, 2020. PHOTO: AFP

HONG KONG (AFP) - Asian investors welcomed a forecast-busting US jobs report to send Asian equities higher on Friday (July 3), though a resurgence in virus infections through the world's top economy continued to temper big gains.

While the US registered more than 50,000 new cases for a second straight day and the authorities across the country reimposed containment measures, traders backed up with a wall of government and central bank cash chose to look to the positives.

And a near-five million jump in employment in June, combined with promising vaccine tests, provided the platform for another market rally that saw the Nasdaq clock up yet another record.

The jobs report showed people returning to jobs in hard-hit and crucial sectors such as leisure and hospitality, which accounted for just under half of the increase.

The US advances, and a strong performance in Europe - where countries are pressing ahead with lockdown easing - gave Asia a strong lead, which investors picked up on.

Hong Kong rose 0.8 per cent after climbing almost 3 per cent on Thursday, while Tokyo finished the morning 0.3 per cent higher and Shanghai jumped more than 1 per cent.

Sydney and Seoul were both 0.6 per cent higher, Taipei put on 0.7 per cent and Wellington gained 0.8 per cent. There were also advances in Singapore and Jakarta, though Manila edged slightly lower.


Chris Gaffney, at TIAA Bank, said: "There's still a general positive sentiment about how quickly we're seeing the recovery.

"But we do think you're going to see the recovery level off, especially if we continue to see higher case numbers on the virus."

Analysts warned that while the employment data were good, jobless claims were still elevated - at 1.43 million last week, which was slightly better than the week before but missed expectations.

They pointed out that the latest spike in infections and the reclosure of some businesses around the US, particularly in the Sun Belt, could put the recovery back.

"The non-farm payrolls report is a mid-June snapshot, which might have been the 'sweet spot' of near-term employment optimism as the virus situation in the US has deteriorated sharply since," warned AxiCorp's Stephen Innes.

"Also, the substantial jobs numbers may provide fodder for the Republican fiscal hawks to resist further budgetary support to be decided on later this month."

He said "it would be tough to take the better-than-expected... payrolls numbers and extrapolate that there will be a V-shaped recovery in the US. The economy has brought back only about 30 per cent of the jobs lost".

White House economic adviser Larry Kudlow injected some nervousness into trading floors by telling Fox Business Network that the US was "very unhappy with China", and there were "going to be export restrictions, particularly with respect to military, national security and some sensitive high technology".

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