Asian Stocks Rise Amid US Holiday; China Data in Focus

Asian stocks rose on Monday as traders mulled US jobs data that supported optimism the Federal Reserve is nearing the end of its tightening cycle. US markets were shut for the Labor Day holiday.

Futures contracts for Japanese and Australian equities edged higher after the S&P 500 Index eked out a gain on Friday to notch its best week since June. China traders looked to see if equities there could build on last week’s advance. Treasury futures were little changed while the dollar was steady after gaining on Friday against major peers.

Friday’s jobs report showed a labor market undergoing a controlled cooling, illustrated by solid hiring, slower earnings growth and more people returning to the workforce. The moderation gives the Fed room to pause rate increases this month while keeping options open for another hike later in the year.

In Asia, China’s trade and inflation data this week will likely signal that the economy’s recovery remains fragile, keeping pressure on policymakers to roll out more stimulus. Global demand for Chinese goods is still weak, as reflected by the depressed level of manufacturing gauges in the country’s main export markets. And an ongoing slump in the property market is curbing China’s import demand for building materials.

Elsewhere, key rate decisions for central banks are scheduled in Australia and Malaysia with rates expected to remain on hold.

Asian Stocks Rise Amid US Holiday; China Data in Focus

Asian Markets

The Nikkei 225 Index rose 0.2% to 28,612.74 points as of 10:04 a.m. Tokyo time, led by gains in consumer discretionary and communication services sectors. The index has rebounded from a six-month low reached on August 19, as investors bet that Japan’s vaccination program will help contain the spread of the delta variant and support economic reopening.

The S&P/ASX 200 Index rose 0.4% to 7,278.30 points as of 10:19 a.m. Sydney time, with energy and materials stocks leading the advance. The benchmark index has recovered from a two-month low hit on August 20, as Australia’s central bank reaffirmed its commitment to maintain stimulus until at least 2024.

The Shanghai Composite Index was little changed at 3,581.34 points as of 9:59 a.m. Beijing time, after rising 2.3% last week. Investors are awaiting China’s trade data for August, which is expected to show a slowdown in both exports and imports amid weakening global demand and domestic consumption.

US Jobs Data

The US economy added 235,000 jobs in August, well below the median estimate of 733,000 in a Bloomberg survey of economists. The unemployment rate fell to 5.2%, matching projections.

The report showed that the delta variant of the coronavirus has dampened the pace of hiring, especially in sectors such as leisure and hospitality that are sensitive to social distancing measures. However, it also suggested that the labor market is not overheating, easing concerns about inflationary pressures and giving the Fed more flexibility in deciding when to start tapering its bond purchases.

“The August employment report should not be interpreted as an indication that economic activity is faltering,” said Michael Gapen, chief U.S. economist at Barclays Plc. “Rather, it is more likely a combination of delta variant fears and labor supply constraints that are holding back employment gains.”

Dollar Strengthens

The Bloomberg Dollar Spot Index rose 0.4% on Friday to a record high of 1,244.91, as investors sought safety in the greenback amid rising uncertainty over the global economic outlook.

The euro was little changed at $1.0774, after falling to a nine-month low of $1.0763 on Friday. The European Central Bank is expected to announce a slowdown in its pandemic bond-buying program at its meeting on Thursday, but also signal that it is not ready to tighten monetary policy anytime soon.

The Japanese yen was little changed at 146.24 per dollar, after hitting a fresh 24-year low of 146.43 on Friday. The Bank of Japan is likely to maintain its ultra-easy policy stance at its meeting on Wednesday, despite growing concerns about the impact of prolonged stimulus on financial stability.

The offshore yuan was little changed at 7.2693 per dollar, after weakening to a three-week low of 7.2738 on Friday. The People’s Bank of China has kept its daily fixing rate stable in recent days, suggesting that it is not concerned about the yuan’s depreciation amid capital outflows and slowing growth.

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