Asia stocks steady, look to US jobs to soothe Brexit anxiety

Stocks had a split session a day ahead of the monthly jobs report. Oil fell dragging down energy shares.
A businessman walks past a monitor displaying stock information in Tokyo, Japan, on July 6.
A businessman walks past a monitor displaying stock information in Tokyo, Japan, on July 6.PHOTO: EPA

TOKYO (REUTERS) - Asian shares were steady in early Friday (July 8) trade as investors brace for US jobs data to see if the world's No 1 economy is resilient enough to weather the fallout from the Brexit vote.

MSCI's broadest index of Asia-Pacific shares outside Japan were down 0.1 per cent while Japan's Nikkei was up 0.5 per cent.

On Thursday, US S&P 500 Index ended down 0.1 per cent as high dividend shares succumbed to profit-taking, though gainers outnumbered decliners by 1.2-to-1.

With the European economy rocked by Britain's decision to leave the European Union, investors are counting on the resilience of the US economy to support global growth.

"While financial markets seem to have absorbed the initial shocks from the Brexit, there's no change in the fact that there is big uncertainty ahead," said Hirokazu Kabeya, chief global strategist at Daiwa Securities. "Investors would need the US economy to be stable."

Ahead of the closely-followed payrolls report later on Friday, US data published on Thursday was mostly positive.

US private payrolls increased more than expected in June as small businesses ramped up hiring, and fewer Americans applied for unemployment benefits last week.

The consensus forecast for Friday's non-farm payrolls data is for 175,000 jobs gain for June, according to a Reuters poll, but investors remained wary given the unexpected negative surprise in payrolls the previous month.

"I would say numbers around the consensus figure will be the most comfortable for markets. Anything below 100,000 will scare investors while reading above 200,000 could rekindle talk of a Fed rate hike even though I suspect people would not seriously expect the Fed to raise rates soon," said Daiwa's Kabeya.

The immediate concerns for investors revolve around the Brexit vote, and already there mounting signs of disruption in the European economy.

UK consumer sentiment posted its biggest drop in more than five years.

Concerns about the health of European banks are smouldering even though their shares rebounded mostly on Thursday.

The British pound was steady for now at US$1.2905, but it still stood just about a cent above its 31-year low of US$1.2798 touched on Wednesday.

Having slipped 2.8 per cent so far this week, it looks set to post its third straight week of losses.

The euro eased to US$1.1064, having shed 0.3 per cent on Thursday, not far from this week's low of US$1.1029 set on Wednesday.

The yen gained 0.6 per cent on Thursday to 100.72 yen per dollar, coming within sight of retesting Wednesday's high of 100.20, as the Japanese currency is seen as a safe-haven at times of distress.

US bond prices retreated a bit on profit-taking after the 10-year yield hit a record low of 1.321 per cent earlier this week. It last stood at 1.390 per cent.

Still, analysts expect US bonds to continue luring investors' funds escaping Europe.

Oil prices fell 5 per cent to two-month lows on Thursday after the US government reported a weekly crude draw within analysts' forecasts that disappointed market bulls expecting larger declines.

Brent crude futures hit a two-month low of US$46.15 per barrel on Thursday and last traded at US$46.94.