A tech rally saw the Nasdaq lead Wall Street rise after Friday’s non-farm payrolls figures, which helped soothe concerns that forecast-busting inflation figures at the beginning of the year meant the Fed would keep borrowing costs at two-decade highs for an extended period
Most Asian markets rose on Monday after data showing fewer US jobs were created last month rekindled optimism interest rates will be reduced this year, while mainland Chinese equities jumped on hopes for fresh government economic support.
A tech rally saw the Nasdaq lead Wall Street rise after Friday’s non-farm payrolls figures, which helped soothe concerns that forecast-busting inflation figures at the beginning of the year meant the Fed would keep borrowing costs at two-decade highs for an extended period.
The 175,000 new jobs in April’s NFP report were much lower than the month before and also marked a big miss on expectations, while wage growth was also marginally lower than predicted.
Observers pointed out that while the figure suggested a downturn, it was not seen as a big enough miss to feed concerns that a recession is on the horizon.
The news ramped up bets on the Fed reducing rates in September while investors also raised their outlook on how many there would be, though the two priced in are still well short of the six envisaged at the beginning of the year.
The softer wage growth and a marginal rise in unemployment may ease some of the Fed’s concerns about implementing rate cuts this summer, according to Stephen Innes at SPI Asset Management.
He added: The unexpected weakness across the key labour series is a much-needed friendly surprise for policymakers.
The advances on Wall Street on Friday – and another record for London – gave Asian investors a healthy lead.
Shanghai was the standout performer as mainland investors returned from a long break.
Traders also cheered a report last week that leaders would look at ways to support China’s battered property sector as well as use measures to provide fresh support to the economy.
Market sentiment seems to be incrementally improving, Nicholas Yeo, of abrdn, said, pointing to improving traveller figures, market reforms and strong corporate releases.
More material support via larger-than-expected fiscal spending and additional help for the property market would go a long way to materially improve sentiment in China, he said.
Hong Kong inched up to push recent gains into a tenth consecutive trading day, while Sydney, Singapore, Taipei and Manila were also higher. Wellington and Jakarta dropped.
