Asian markets struggle to bounce back after rout

HONG KONG: Asian equities struggled on Monday following last week’s painful sell-off, with a mixed US jobs report offsetting a pledge from Federal Reserve boss Jerome Powell that interest rates would remain rock-bottom for years.

China-US tensions and a lack of progress in Washington stimulus talks — all against the backdrop of the coronavirus pandemic — were keeping markets from surging.

Closely watched non-farm payrolls data Friday showed the US economy created 1.37 million jobs last month, slightly better than expected, while unemployment plunged to 8.4 percent from 10.2 percent — well below forecasts.

Powell described the report as “a good one,” but added the bank would not change its ultraloose monetary policy until the economy was back on track.

“We think that the economy’s going to need low interest rates, which support economic activity, for an extended period of time,” he said. “It will be measured in years.”

But while the reading was good, a closer look showed 344,000 jobs were for temporary workers hired for a census. Earlier in the week, private- sector payrolls came in well short of estimates, indicating the recovery continues to stutter.

Wall Street’s three main indexes suffered more losses, albeit shallower than Thursday’s rout that hammered the tech sector as traders took profits from months of huge gains.

“Risk assets remain fragile following Thursday’s tech- led rout and volatility spike,” said Ben Emons, at Medley Global Advisors.

“With stimulus having been key for supporting equities and such lofty valuations, its renewal will be crucial not only for the recovery, but as a driver for equities as job risks mount.”

Britain’s ‘no- deal’ risk

There are few expectations for progress on a new US stimulus with Democrats and Republicans digging their heels in, despite millions of Americans struggling to make ends meet.

Tokyo closed 0.5 percent lower with SoftBank plunging more than seven percent after reports said the conglomerate had been engaging in high-risk derivatives trading of tech shares in New York.

The Financial Times said the firm had “stoked the fevered rally in big tech stocks” that helped the Nasdaq rocket higher since March.

Shanghai ended down 1.9 percent, while Hong Kong closed 0.4 percent lower after fresh unrest in the city over the weekend as pro- democracy demonstrators clashed with police on the day that cancelled elections were due to take place.

But Sydney was marginally higher, while Seoul, Wellington and Manila were also in positive territory.

Investors were also keeping tabs on the European Central Bank’s next board meeting Thursday and poring over boss Christine Lagarde’s news conference, looking for clues of possible policy changes.

In currency markets, the pound was under pressure after British Prime Minister Boris Johnson set an October 15 deadline for a post-Brexit trade agreement with the European Union, raising fresh concerns the country could be left without a deal.

“If we can’t agree by then, then I do not see that there will be a free- trade agreement between us,” Johnson said, insisting it would still be a “good outcome” for Britain.

London, Paris and Frankfurt were all in positive territory in early European trade.