Asian share prices held firm on Monday after solid US payroll data underpinned investor risk sentiment while dovish comments from Federal Reserve Chair Janet Yellen the previous week kept the US dollar in check.
Oil prices showed signs of fatigue after last quarter’s rebound, extending their decline on Friday following comments from a powerful Saudi prince that raised doubts about the chance of any output freeze deal later this month.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.7 per cent while Japan's Nikkei also ticked up 0.2 per cent after an initial fall. Financial markets in Greater China are closed for a holiday. US stocks rose on Friday, with the S&P 500 gaining 0.63 per cent to a three-month high, after better-than-expected US jobs and factory numbers.
Nonfarm payrolls increased 215,000 in March, beating expectations while average hourly earnings rose seven cents, recovering from a slip in February. The unemployment rate rose to 5.0 per cent from an eight-year low of 4.9 per cent, though that was due to more people seeking work, a sign of confidence in the jobs market.
Manufacturing data from the US and China also eased concerns about slump in the global manufacturing activity. Yet the cautious rate-hike view expressed by Fed Chair Janet Yellen last week resonated among investors, limiting expectations of a near-term rate hike by the Fed.
“U.S. labour markets are firm, with the pool of labour expanding but pressure on wages is hardly rising. We have been seeing this for a long time and unless it changes, markets will focus more on Yellen’s stance,” said Koichi Yoshikawa, executive director of financial markets at Standard Chartered Bank. Two-year Treasury yield stood at 0.736 per cent, not far from a one-month low of 0.725 per cent touched on Thursday while the 10-year US Treasury yield dipped to 1.757 per cent, hitting a one-month low.
“The fall in oil prices is making it easier for investors to buy bonds. Japanese investors’ buying in foreign bonds is also helping to depress US long-date bond yields,” said a derivative trader at a Japanese brokerage.
Low US yields undermined the US dollar in the currency market. The euro stood at $1.1397, not far from its 5 1/2-month high of $1.1438 touched on Friday. It has not shown any reaction so far to the fresh tension among Greece and its lenders over a leaked transcript suggesting that IMF staff may threaten to leave the bailout to force European lenders to offer more debt relief. Against the yen, the dollar fell to 111.52 yen, having dropped to a two-week low of 111.32 early on Monday. The dollar was also weaker against a number of currencies in emerging markets.
Hedge funds are buying back emerging currencies they had sold heavily last year. The Malaysian ringgit rose to eight-month high while the Indian rupee stood near three-month high. The Brazilian real stood at seven-month high while the South African rand was at a four-month high as the presidents of both countries face possible impeachment for alleged misconduct, strengthening perceptions that due process is still intact.
Oil markets are losing momentum after their recovery from mid-February to March as doubts return over the ability of big oil producing countries to agree an output freeze when they meet on April 17. Saudi Deputy Crown Prince Mohammed bin Salman said on Thursday that OPEC’s traditional swing producer will not join the output freeze without the participation of Iran and other major exporters, Bloomberg reported. Iran has maintained that it will not participate in any freeze until its oil exports return to pre-sanctions levels. Adding to concerns of a global glut which has pulled down prices by as much as 70 per cent since 2014, US production has remained high despite steep cuts in drilling for new reserves as well as a jump in bankruptcies. Brent crude futures fell to as low as $38.19 per barrel, its lowest in a month, on Monday and last stood at $38.34 per barrel, down 0.9 per cent. US crude futures dropped 1.3 per cent to $36.33, hovering near their lowest level in three weeks.
Reuters
