HONG KONG: Most Asian markets rose on Monday while the dollar clawed back some of its hefty losses after last week’s soft US jobs report reduced the chances of an imminent interest rate rise, but the stronger yen hit Japanese exporters.
The US Labor Department said Friday that May saw the world’s top economy create the fewest number of jobs in six years, slashing expectations borrowing costs will rise any time soon.
Traders who had been expecting the Fed to announce a rise no later than July—with the central bank having hinted at such just last month—were caught off guard.
The dollar was sent plunging two percent against both the yen and the euro on Friday but made some minor headway in afternoon trading Monday.
The greenback edged up to 107.13 yen from 106.63 yen in New York but was still sharply down from levels above 109 yen before the jobs report.
The euro dipped to $1.1357 from $1.1364 but was well up from the $1.1154 reached Thursday.
“The slowdown in job growth in recent months must have put paid to any chance of a hike in interest rates by the Fed at its mid-June meeting,” said Richard Jerram, chief economist at Bank of Singapore.
“A July rate hike is still possible but it would require a very strong June jobs report, reversing much of the slowdown of recent months. If the June report is inconclusive then the Fed might find it sensible to wait until its mid-September meeting.”
The yen’s rise hit Japan’s exporters, although afternoon buying pared early losses. The Nikkei closed 0.4 percent down, having sunk more than 1 percent in the morning.
Shanghai ended 0.2 percent lower while Hong Kong added 0.4 percent and Sydney was 0.8 percent higher.
The prospect that US borrowing costs will remain low for some time provided support to emerging markets, with Manila, Jakarta and Bangkok well up.
Higher-yielding, or riskier, currencies also gained. South Korea’s won added 1.4 percent against the dollar, Indonesia’s rupiah jumped 1.5 percent and the Malaysian ringgit climbed one percent.
However, the greenback rallied against the British pound after opinion polls at the weekend showed more people saying they will vote to leave the European Union. The pound was at $1.4400 from $1.4515 Friday in New York.
The dollar’s broad weakness supported oil prices, which held around the $50 mark despite OPEC’s decision last week not to make any production cuts.
Brent was up 1.2 percent at $50.22 and West Texas Intermediate also gained 1.2 percent to $49.19.
In early European trade London added 0.4 percent, Frankfurt was flat and Paris fell 0.3 percent.