Asian stock markets were higher Monday, lifted by a better-than-expected U.S. jobs report and gains on Wall Street Friday. In Australia, new reports on China’s accusations against Rio Tinto drove the miner’s shares lower.
“Bottom line is the (U.S. jobs) data is good in detail as well as headline and revisions are in the right direction. This will likely strengthen the green shoots story and take some pressure off the Obama Administration’s defenders that the stimulus plan is not working,” said analysts at Brown Brothers Harriman in a note.
Data released Friday showed U.S. employers cut 247,000 jobs in July after shedding a revised 443,000 a month earlier. The July drop was less severe than the 275,000 fall forecast by economists in a Dow Jones Newswires survey.
The Dow Jones Industrial Average rose 1.2% on Friday, while the Nasdaq Composite index gained 1.4%.
Japan’s Nikkei 225 was up 1.3%, Australia’s S&P/ASX 200 was up 0.7%, South Korea’s Kospi Composite gained 0.1% and New Zealand’s NZX-50 was 0.2% higher. DJIA futures were 2 points higher in screen trade. Singapore markets were closed for a public holiday.
China shares dipped as the effects of Premier Wen Jiabao’s weekend reiteration that the government would take a “moderately loose” monetary policy stance in regulating the economy were downplayed. The Shanghai Composite Index was 0.2% lower. Hong Kong’s Hang Seng Index rose 2.1% while Taiwan shares were up 0.3%, recovering from Friday’s sharp fall.
Malaysia’s Kuala Lumpur Composite Index was up 0.1% while Indonesia shares rose 1.2% helped by the firmer rupiah and gains across Asia. Philippine shares were 2.2% higher while Thailand shares were up 1.0%.
In Australia, Rio Tinto was down 1.5% following weekend accusations published on a website that says it is affiliated with China’s state secrets bureau, that Rio illegally obtained information about China’s steel sector for six years, which resulted in Chinese steelmakers being overcharged more than $100 billion for iron ore.
Ord Minnett analyst Peter Arden said investors had been hoping that the issue of the four detained Rio employees was cooling off, but that these latest statements have revived fears. Arden said the issue may weigh on Rio’s shares until it is resolved, even though iron ore sales will continue. “The reality is that China needs the iron ore,” he said.
BHP was up 0.6%, while Fortescue was up 4.3%, Bluescope gained 3.1% and Westfield rose 2.2%.
Patersons’ senior trader, Chris Blair, expected the Sydney market to consolidate; “I think we’ll wait to tonight to see if Friday’s gains on Wall Street are sustainable. It was probably a bit of a knee-jerk reaction to those U.S. jobs figures and I think the market is too stretched.”
The Japanese stock market was enjoying a broad-based rally with exporters lifted by the yen’s weakness against the dollar over the weekend. Toyota was up 2.2%, Honda gained 3.9%, Canon rose 2.4% and Sony was 4.3% higher.
Data released before the market open showed Japanese core machinery orders rose 9.7% in June from the previous month, but the data also showed that Japanese companies expect core orders to decrease 8.6% from the previous quarter in the July-September period; “The June figure is positive but the July-September forecast is negative, so overall, the data won’t move the market much,” said Tachibana Securities analyst Kenichi Hirano.
Sentiment in Seoul was lifted after the International Monetary Fund said Sunday it has sharply revised upward its 2009 growth outlook for the country.
In Hong Kong, China Shenhua Energy was up 3.1% after reporting better-than-expected preliminary results.
In Taiwan, construction and steel stocks were up with Shining Building 3.2% higher and Tung Ho Steel up 3.5% on anticipated construction demand, to repair damage caused by typhoon Morakot.
In New Zealand, bellwether Telecom slipped 0.7% after rising earlier in the day. Retailer Hallenstein Glasson was up 0.4% while Fletcher Building had lost 1.8%.
In foreign exchange markets, the yen was a little higher against the euro and the dollar due to demand from Japanese exporters. Trade was light and in a relatively tight range with some traders away for summer vacations.
The dollar was at Y97.25 from Y97.48 in late New York trade, while the euro was at $1.4196 from $1.4169 and at Y138.08 from Y138.46.
The September Japanese government bond futures contract was sharply lower, down 0.33 at 137.26 points, weighed by the Nikkei’s rise. The five-year yield rose to 0.735%, its highest since June 25, as growing anticipation of an economic recovery prompted investors to sell safe-haven assets. The 10-year yield was up 2.5 basis points at 1.455%.
Spot gold was down $2.40 from late in New York, at $954.90 per troy ounce.
Macquarie noted that base metals prices looked high relative to historical stock levels for aluminum, zinc and copper. “In other words, the latest stock-to-price relationships suggest that the base metals market is pricing in a reduction in metals inventories relative to demand,” so metals inventories will fall or demand will rise, or both.
LME three-month aluminum was trading at $2,010 per metric ton, down $10 from the afternoon kerb on Friday while LME three-month copper was at $6,150 per metric ton, up $125.
Nymex September crude oil futures were down 16 cents at $70.77 per barrel.