Asian stocks up on hopes Fed will delay rate rise
Asian equity markets were higher Monday after a weak U.S. jobs report fueled speculation that the world’s number one economy is not ready for an interest rate rise any time soon.
The positive movement also followed news that officials negotiating an ambitious Pacific trade pact were inching closer to announcing a deal.
Markets across Asia tracked Friday’s surge on Wall Street after a September unemployment report increased the likelihood the U.S. Federal Reserve will keep key interest rates near zero for longer.
A rate hike delay would give global stock markets some breath- ing space after suffering their worst quarter since 2011, analysts said.
“The Fed is extremely unlikely to begin policy normalization as soon as this month and December is looking tenuous too,” Philip Borkin, a senior economist in Auckland at ANZ, said in a client note.
Hong- Kong listed Glencore soared after reports it is seeking buyers for its agriculture business, jumping 72 percent at one point.
Investors are also eyeing upcoming central bank meetings in Australia and Japan.
Speculation is growing that an economic downturn in Japan will force policymakers in Tokyo to increase stimulus measures.
Talks on the Trans-Pacific Partnership, which, if successful will create the world’s largest free trade zone, were extended to Monday, as the 12-nation bloc pushed to get a long-awaited deal. But earlier in the day, Japan’s Economy Minister Akira Amari told reporters “major progress” had been made.
“We are making preparations now to announce a deal in principle this afternoon,” Amari said, according to a translation of his remarks supplied by Japanese journalists.
Wall Street Rally
Regional players were given a positive lead from New York, where the three main indices ended last week with strong gains.
The Dow climbed 1.23 percent, the S&P 500 jumped 1.43 percent and the Nasdaq gained 1.74 percent.
In Asian markets Monday Tokyo closed 1.58 percent, or 280.36 points, higher at 18,005.49, while Sydney added 98.5 points, or 1.95 percent, to 5,150.5 despite lower volumes due to a public holiday in New South Wales state.
Seoul finished 0.44 percent higher, led by pharmaceuticals and food manufacturers, gaining 8.57 points to close at 1,978.25.
Hong Kong stocks had added 1.32 percent by mid-afternoon, extending a rally from last week, after a report said mainland China’s government will roll out more financial policies to support Macau.
Shanghai was closed for a public holiday.
The World Bank on Monday cut its growth forecasts for developing economies in East Asia and the Pacific but allayed fears of a hard landing for China’s slowing economy.
European Equities Rebound
European stock markets rebounded Monday, after hefty gains elsewhere, as weak U.S. data fueled talk the U.S. Federal Reserve would not hike interest rates any time soon.
London’s FTSE 100 index jumped 2.03 percent to 6,254.40 points nearing midday in the British capital.
In the eurozone, Frankfurt’s DAX 30 won 2.11 percent to 9,754.90 points and the Paris CAC-40 rallied 3.17 percent to 4,600.30 compared with Friday’s close.
In foreign exchange trading, the European single currency rose to US$1.1271, up from US$1.1219 late in New York on Friday.
Asian indices also tracked Friday’s surge on Wall Street after a September unemployment report increased the likelihood the U.S. Federal Reserve will keep key interest rates near zero for longer than previously thought.
A rate hike delay would give global stock markets some breathing space after suffering their worst quarter since 2011.
“Markets had been anticipating that the Federal Reserve would raise rates in December, but Friday’s very weak employment numbers may have thwarted any chance of a 2015 rate rise,” said Rebecca O’Keeffe, head of invest- ment at online stockbroker Interactive Investor.
U.S. job growth faltered in September and the labor market weakened across the board, the Labor Department said.
The U.S. economy added a disappointing 142,000 jobs in September, well below analyst estimates of 205,000.
The prospect of rising interest rates tends to send markets lower because they increase loan repayments for businesses, while slashing disposable incomes for consumers.
“Share prices across the world have bounced strongly from Friday’s lows on the prospect that the Fed’s intended rate hike may now be postponed until 2016,” added O’Keeffe.