Asian shares rallied today after last week’s weaker-than-expected USA jobs report prompted investors to trim expectations that the Federal Reserve would hike interest rates as early as this month.
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“One positive for the market is that the correlation between the Nikkei and the yen appears to be breaking down”, said Gavin Parry, managing director at Parry International Trading Ltd.
USA equities declined further Wednesday after the country’s ADP employment report came out better than expected, which is watched closely as a pre-indicator for the non-farm payrolls report due on Friday.
Another survey of British economic activity provided further evidence that the British economy has held up better than many people expected following the June vote to leave the European Union.
Stocks in Europe and Asia started the week higher, helped by a steep rise in oil prices and expectations that the Federal Reserve would keep interest rates on hold for longer.
The greenback remained under pressure after data on Friday showed that the USA economy added 151,000 jobs in August, disappointing expectations for an increase of 180,000.
“Markets hardly took it as a bad number, with conjecture from both sides of the fence on what it means for the Fed”, Cameron Bagrie, chief economist in Wellington at ANZ Bank New Zealand, said in a research note.
Markets were also keeping a watch on the two-day summit of leaders from G20 nations, in Hangzhou, China.
The dollar dipped against higher-yielding currencies, with South Korea’s won climbing nearly one percent, while the Indonesian rupiah and Malaysian ringgit also sharply higher.
Chinese President Xi Jinping said at the open of the summit yesterday that global economy was being threatened by rising protectionism and risks from highly leveraged financial markets.
“There is no free lunch for any policy”. “Monetary policy is not well equipped to address long-term issues like the slowdown in productivity growth”, U.S. Federal Reserve Vice Chair Stanley Fischer said on Sunday, calling on Washington to invest more in infrastructure and education to juice up the slowly recovering U.S. economy. The bank isn’t expected to alter its rates, but economists are divided over whether it will extend its asset-purchase program.
ENERGY: Oil prices pushed ahead amid speculation of a production freeze after the world’s two largest oil producers, Russian Federation and Saudi Arabia, agreed to act together to stabilize global oil output. Brent crude, the benchmark for worldwide oil prices, rose 92 cents to $47.75 a barrel.
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But for the week, Brent fell 6 percent, its biggest drop in five weeks, while USA crude fell almost 7 percent to mark its largest decline in eight weeks.
