Stocks advance after US jobs data; dollar retreats vs peers

Crude oil prices leap; gold firms

NEW YORK, April 6, (Agencies): The dollar weakened further on Monday but stocks on Wall Street rose after a disappointing US jobs report on Friday likely postponed the Federal Reserve’s first interest rate increase in nearly a decade.

Major European markets remained closed for the Easter holiday, limiting trading volumes.

Asian equity markets rose after US Labor Department data for March showed employers added the fewest jobs in more than a year. The gain of 126,000 jobs last month was well below economists’ expectations for an additional 245,000.

ISM data on Monday showed the pace of growth in the US services sector fell in March to a three-month low but a measure from Markit showed the sector expanded in March at its fastest pace since August.

Investors are concerned that a patch of soft US economic data, including jobs, factory activity and consumer spending, suggests more than a winter weather-related slowdown and instead may indicate a loss of momentum in the US economy.

“The market seems to be very confused whether bad or good news is good news,” said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin, Texas.

He said investors are “unsure about whether we should be excited on bad news because the Fed will not raise rates, or if we should be seeing a stronger economy.”

The weak data eased concerns the dollar would strengthen further and pressure results of companies with international exposure. MSCI’s all-country world index, a measure of stock performance in 46 countries, rose 0.77 percent. Expectations the Fed will raise rates this year have fueled the dollar’s rally since mid-2014. Higher US rates give dollar-denominated assets a yield advantage versus other currencies where interest rates are lower.

The euro held above the $1.10 mark, but one strategist saw dollar strength returning.

“Chalk up the euro’s strength to low volumes. It has had stiff resistance at the $1.1050 level, which goes back to the beginning of March,” said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York

“I don’t think we break through that resistance,” he said.

The euro gained 0.52 percent to $1.1033, while the dollar traded down 0.03 percent against the yen at 118.93 yen.

US Treasury debt prices fell, giving up gains from the previous session, on the unexpectedly weak nonfarm payrolls.

Yields on benchmark US 10-year and two-year notes inched up from two-month lows but the trend remained negative given the uncertain rate outlook. Bond yields move inversely to prices.

“We had a big rally last Friday after the jobs report, so this is just the fading of that rally,” said David Keeble, global head of interest rate strategy at Credit Agricole in New York.

The price of US 10-year Treasuries fell 13/32, pushing up yields to 1.8830 percent.

Oil futures climbed more than $2 a barrel after Saudi Arabia raised its prices for crude sales to Asia for the second month running, signaling improved demand in the region.

Brent crude for May delivery rose $2.68 to $57.63 a barrel. US crude for May delivery gained $2.38 to $51.52.

US

US stocks rose on Monday as expectations the Federal Reserve will push any interest rate increases further into the year offset concerns over faltering economic growth spurred by a surprisingly weak jobs report on Friday.

Labor Department data showed US employers last month added 126,000 jobs, the lowest in more than a year and well below expectations. On Monday, New York Fed President William Dudley said the central bank will need to determine whether that jobs report foreshadows a more substantial slowing in the labor market, adding he expects the path of rate hikes to be “relatively shallow.” “That’s why they took it as dovish,” said Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis, of the market reaction to Dudley’s words. “Traders are taking advantage of headlines to move the market around.”

In other economic news, ISM data showed the pace of growth in the US services sector fell in March to its lowest level in three months, while a measure from Markit showed the sector expanded in March at its fastest pace since August.

Investors are concerned that a recent spate of soft economic data, including jobs, factory activity and consumer spending, may point to more than a weather-related slowdown and could indicate a loss of momentum in the US economy.

Still, the lackluster data also eased some concerns over the US dollar continuing to strengthen and pressure the earnings of companies with international exposure.

At noon on Wall Street (1600 GMT), the Dow Jones industrial average rose 126.56 points, or 0.71 percent, to 17,889.8, the S&P 500 gained 14.98 points, or 0.72 percent, to 2,081.94 and the Nasdaq Composite added 27.58 points, or 0.56 percent, to 4,914.52.

Utilities, preferred by safety-seeking investors when Treasury yields fall, were the best performer of the 10 S&P 500 sectors. Energy followed, helped by a more than 5 percent jump in oil futures after Saudi Arabia raised its price for sales to Asia and estimates for crude buildups fell.

US-listed shares of Amsterdam-based Uniqure jumped 46.6 percent to $33.51 after a deal with Bristol-Myers Squibb to develop gene therapies for cardiovascular diseases.

Tesla Motors added 7.5 percent to $205.36 after it reported a 55 percent increase in deliveries in the first quarter.

Advancing issues outnumbered declining ones on the NYSE by 2,256 to 727, for a 3.10-to-1 ratio; on the Nasdaq, 1,459 issues rose and 1,146 fell for a 1.27-to-1 ratio.

The benchmark S&P 500 index was posting 20 new 52-week highs and 3 new lows; the Nasdaq Composite was recording 51 new highs and 21 new lows.

Asia

Tokyo shares ended lower on Monday (Apr 6) while the yen climbed against the dollar following a worse than expected US jobs report seen as making an early US rate rise more unlikely.

Oil prices rose on expectations that any new exports from Iran would not likely come on the market for some time, despite the initial nuclear agreement.

With several major markets shut for public holidays and Wall Street closed on Friday, trading was thin with few catalysts to spur business. Tokyo fell 0.19 per cent, or 37.10 points, to 19,397.98 and Seoul was flat, edging up 1.01 points to close at 2,046.43.

Shanghai, Hong Kong, Bangkok, Taipei, Sydney and Wellington were closed.

A pick-up in the yen pushed shares in Japanese exporters down as it makes their goods more expensive abroad.

Oil prices rose because Tehran’s nuclear deal with the West has still to be finalised, meaning sanctions will stay in place for now. US benchmark West Texas Intermediate was up US$1.21 cents at US$50.35 while Brent added US$1.17 to US$56.12. Oil was also supported by news that major producer Saudi Arabia raised prices for all May sales to Asia, saying demand was improving.

However, Sanjeev Gupta, who heads the Asia-Pacific Oil and Gas practice at professional services firm EY, said prices are likely to resume their downtrend as traders digest the impact of the agreement between Iran and the US-led western powers. In other markets: Manila closed 0.76 per cent, or 60.65 points, higher at 8,053.74.

Ayala Corp. was up 0.13 per cent at 800 pesos, Metrobank gained 0.81 per cent to 99.80 pesos and Universal Robina added 1.77 per cent to 230 pesos.

Mumbai rose 0.86 per cent, or 244.32 points, to end at 28,504.46 points.

Sun Pharmaceuticals Industries rose 8.34 per cent to 1,168.50 rupees, while Tata Steel fell 1.84 per cent to 318.05 rupees.

Jakarta ended up 0.43 per cent, or 23.63 points, at 5,480.03.

Atomotive company Astra International gained 1.55 per cent to 8,200 rupiah while construction firm PT Pembangunan Perumahan slipped 1.48 per cent to 3,650 rupiah.

Kuala Lumpur gained 8.42 points, or 0.46 per cent, to close at 1,842.94.

Telekom Malaysia added 2.13 per cent to 7.67 ringgit and Tenaga Nasional rose 0.14 per cent to 14.32, while AMMB Holdings dipped 0.16 per cent to 6.40 ringgit.

Singapore fell 0.02 per cent, or 0.84 points, to 3,452.91.

United Overseas Bank rose 0.61 per cent to S$23.22 while Singapore Telecom gained 0.68 per cent to S$4.42.

Oil

Oil prices jumped over 5 percent on Monday as traders reassessed how quickly Iran might increase exports after a preliminary nuclear deal and anticipated that a months-long rise in US crude inventories may be slowing.

Brent crude tumbled nearly 4 percent on Thursday after Iran and six world powers announced a framework agreement on the OPEC member’s nuclear program. But initial expectations of a quick recovery in oil exports were tempered by views that it could longer than expected to roll back sanctions.

“People betting on Iran’s oil arriving tomorrow realize they may have to wait up to a year,” said Phil Flynn, analyst at Price Futures Group in Chicago.

Oil extended gains after industry intelligence group Genscape reported that stockpiles at Cushing, Oklahoma, barely rose last week, according to traders. It would be the smallest increase since November at the delivery point for the US crude contract traded on the New York Mercantile Exchange.

Brent May crude was up $3.08, or 5.6 percent, to $58.03 a barrel at 1:01 p.m. EDT (1701 GMT), having reached $58.20 intraday.

US May crude was up $2.78, or 5.7 percent, at $51.92 a barrel, just below its $51.95 intraday peak.

A weaker dollar following Friday’s disappointing US jobs report for March buoyed crude oil prices on Monday.

Also supportive to the market was news that top exporter Saudi Arabia raised the prices for all the crude oil grades it will sell to Asia in May, raising prices a second straight month.

Concerns over conflict in Yemen supported prices, as fighting between a Saudibacked coalition and Shi’ite Houthi forces continued.

Gold

Gold rose 1 percent to a seven-week high on Monday, climbing for the second straight session after US jobs rose at the slowest pace in more than a year, fueling expectations the US Federal Reserve could postpone an anticipated rate increase.

Nonfarm payrolls rose 126,000 last month, less than half February’s pace and the smallest gain since December 2013, the Labor Department said on Friday. The data pushed the US dollar lower, making dollardenominated gold cheaper for holders of other currencies.

That data could prod the US central bank to delay a rate increase that analysts had expected to come in June or September amid signals from the Fed it was ready to tighten monetary policy in view of a strengthening labor market.

“I think people are feeling comfortable being long gold after the payrolls data,” said Yuichi Ikemizu, branch manager at Standard Bank in Tokyo.

Spot gold was up 1 percent at $1,221.60 an ounce at 11:20 p.m. EDT (1520 GMT), after hitting a session high of $1,224.10, the highest since Feb. 17.

US gold for June delivery climbed 1.8 percent to $1,222.30 an ounce.

A delay in the first US rate increase since 2006 would burnish gold’s draw as a safe-haven asset.