Asian equities build on rally as US jobs data fans recovery hopes
A blockbuster United States jobs report that fanned optimism about the economic recovery from the coronavirus crisis helped push Asian stock markets even higher Monday, while a decision to extend production cuts provided fresh support to oil prices.
As countries continue to ease lockdown measures and with trillions of dollars in stimulus and central bank support pledged, equities across the planet have surged since hitting a trough in March.
And the release of data Friday showing a staggering 2.5 million US jobs were created in May – compared with an expected loss of more than eight million –
added to the optimism, pushing the Nasdaq and the S&P 500 on Wall Street to within spitting distance of record highs.
Canada also reported a surprise increase in employment, confounding forecasts of a big drop.
"While there are still significant uncertainties over the COVID-19 impact on corporate earnings, investors are encouraged by the reopening of economies that is likely to lead to a rebound in profitability later this year," said Iyad Abu Hweij of Allied Investment Partners PJSC.
Tokyo rose more than one percent, while Wellington surged more than three percent after New Zealand officials reported no active cases of coronavirus for the first time
since the pandemic began, and said the country was free of the disease – adding that restrictions would be lifted.
Hong Kong inched up for a sixth straight gain, Seoul added 0.1 percent, Shanghai closed up 0.2 percent, while Mumbai, Taipei and Singapore jumped more than one percent, with Jakarta three percent higher.
Bangkok and Manila were also higher.
In early trade, London, Paris and Frankfurt dropped on profit-taking after surging Friday. Sydney was closed for a holiday.
"In the space of four weeks we've seen history made as the US economy posted a record number of job losses in one month, only to be followed by a record number of jobs gains in the following month," said Michael Hewson at CMC Markets.
But he added: "Despite all of the enthusiasm over last month’s jobs report it doesn’t change the fact that US unemployment is still well above post financial crisis levels, and is likely to remain so for quite some time."
‘Increased confidence’
Jason Wong at BNZ markets added: "The data are consistent with activity indicators that show a recovery in activity as US lockdowns eased, following the big hole in the economy in April, and give increased confidence that activity is on a clear path upward from here as restrictions have eased further."
As Latin America experiences a spike in infections and deaths, Europe continues to reopen to some semblance of normality, providing a much-needed boost to the shattered tourism industry.
Adding to the positive sentiment was news that major oil producers had agreed to extend output cuts of almost 10 million barrels a day for another month through to the end of July.
The deal, which had been expected, provided further support to crude prices, which have surged over the past two months thanks to the cuts and the easing of lockdowns that has boosted demand.
The agreement "is hugely positive for sentiment as the presumption is this clampdown will accelerate the rebalancing of supply and demand", said AxiCorp's Stephen Innes.
"The recognition that the deep cuts need to continue for a month or perhaps longer shows that despite the recent surge in oil prices, the large producers remain worried about the fragile state of the oil markets."
Bloomberg News contributed to this story
