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Tuesday, May 17, 2022

Asian stocks inspired by Wall Street rally, U.S. data

By Ian Chua

SYDNEY (Reuters) – Asian stocks rose on Monday as investors gave the thumbs up to an upbeat U.S. labor force report that sent Wall Street to an all-time closing high last week, while the dollar held its ground against the yen.

MSCI’s broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> climbed 0.5 percent with Australia’s main share index (.AXJO) more than 1.0 percent higher. South Korean shares (.KS11) advanced 0.7 percent.

Japanese financial markets are shut on Monday for a public holiday and will reopen on Tuesday.

The gains came after data on Friday showed U.S. employment rose at a faster pace than expected in April and hiring was much stronger than previously thought in the prior two months, a relief to investors nervous about a U.S. slowdown.

But other U.S. data, including a survey of the vast services sectors, were less encouraging and led investors to suspect that the Federal Reserve will probably maintain its aggressive stimulus program.

“We take the April employment report, in conjunction with other data, as supportive of the Fed keeping its (debt) purchase program intact,” analysts at Barclays Capital wrote in a note.

“Labor market and inflation trends are soft enough to reduce the likelihood of tapering, in our view, but steady enough to keep the Fed from increasing the pace of its purchases.”

The data helped lift U.S. Treasury yields, which in turn gave the dollar a boost against the low-yielding yen. Having rallied more than 1 percent on Friday, the dollar last traded at 99.11 yen, up 0.1 percent on the day. It is within a hair’s breath of a 4-year peak near 100 scaled last month.

Other currencies outperformed the greenback with the Australian dollar back around $1.0300, well off last week’s low near $1.0220.

The Aussie’s immediate fortunes depend on local retail sales data due at 0130 GMT (0930 EST). Any disappointment could see the market firm up expectations for a cut in interest rates at the Reserve Bank of Australia’s policy meeting on Tuesday.

A standout this morning was the Malaysian ringgit, which hit a 20-month high on the greenback after Sunday’s election saw the governing coalition extend its half-century rule, albeit with its worst-ever performance.

Commodities also added to gains, having powered higher on Friday in the wake of the U.S. jobs report. U.S. crude rose more than one percent towards $97.00 a barrel, reaching fresh one-month highs.

Copper is in focus after it stole the limelight with a 6.5-percent rally to $7,270.00 on Friday.

However, to put its move in perspective, copper had fallen nearly 20 percent in the past three months partly on worries about a slowing global economy.

Source: Reuters

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