Asia’s major markets responded positively on Monday to news of a shortfall in new US jobs last month – which fuelled optimism that the Federal Reserve will hold fire on tapering its massive financial support programme – with Tokyo leading the way, approaching three-decade highs on the back of hopes for a major new government spending boost.
Traders were reacting to data released on Friday that showed about a third of the expected number of new jobs were added to the world’s top economy in August, largely because of the spread of the Delta variant of Covid-19.
And even though the numbers suggest the blockbuster recovery enjoyed at the start of this year now appears to be stuttering, observers say it will allow the US central bank to take a little more time scaling back its bond-buying monetary easing.
Fed boss Jerome Powell indicated last month that officials would begin tapering the policy, which has been a key pillar of the economic and market surge for more than a year, by the end of 2021 – but would take it slowly.
“It reinforces the Delta variant impact on current economic conditions and therefore policy makers have to pivot and be agile,” George Boubouras, of K2 Asset Management, said on Bloomberg Television.
“It reinforces that some form of stimulus will remain in the system for the foreseeable future.”
The jobs data was met with a shrug on Wall Street, with the Dow and S&P 500 edging down, though the Nasdaq ticked up to another record.
But Asia built on last week’s broadly positive performance with Hong Kong, Shanghai, Seoul, Singapore, Sydney and Wellington all rising, while Taipei, Manila and Bangkok dipped.
The Hang Seng Index climbed 1.01%, or 261.64 points, to 26,163.63. The Shanghai Composite Index rose 1.12%, or 40.12 points, to 3,621.86, while the Shenzhen Composite Index on China’s second exchange jumped 2.03%, or 49.07 points, to 2,463.36.
Tokyo was the standout again, though, surging 1.8% going into the break after a more than 2% rally on Friday. The Nikkei 225 is now closing in on levels not seen in more than 30 years.
The benchmark Nikkei 225 index ended up 1.83%, or 531.78 points, at 29,659.89, while the broader Topix index gained 1.28%, or 25.77 points, to 2,041.22.
The gains came after Prime Minister Yoshihide Suga said he would not stand for re-election this month, effectively stepping down from the premiership.
The news fanned speculation that his successor will push for a big-spending pandemic stimulus package to kickstart the world’s third-largest economy.
Oil prices extended Friday’s drop after Saudi Arabia cut the price it charges Asian buyers by more than double what was expected, adding pressure to the market after OPEC and other major producers agreed last week to press ahead with lifting output.
Tokyo – Nikkei 225: UP 1.8% at 29,659.89 (close)
Hong Kong – Hang Seng Index: UP 1.0% at 26,163.63 (close)
Shanghai – Composite: UP 1.1% at 3,621.86 (close)
New York – Dow: DOWN 0.2%at 35,369.09 (close)
- AFP and Sean O’Meara