Asia Ekes Out Gains, Sombre Data Offsets Robust US Jobs Numbers
Tokyo: Asian stocks eked out gains on Monday in wake of much stronger-than-expected US employment numbers, although sobering data highlighted the sluggishness in the region's key economies and tempered gains.
The dollar hovered at multi-year highs against the yen after Treasury yields spiked on the robust US employment report.
Indicators released on Monday showed that China's trade performance in November was much weaker than expected while Japan's economy in the third quarter shrank more than initially reported.
MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.1 per cent. Tokyo's Nikkei stood flat as the downward revision to Japan's GDP neutralised the positive impact of a weaker yen.
The Shanghai composite index gained 1.5 per cent after the downbeat Chinese data added to hopes that China will implement more stimulus to shore up its economy.
"Shockingly, (China's) imports contracted by 6.7 per cent year-on-year - their weakest performance since the Lehman crisis (except the volatile Lunar New Year-related period), said Dariusz Kowalczyk, economist at Credit Agricole in Hong Kong.
"This is partly a reflection of lower commodity prices and base effects, but these two factors cannot fully explain the weak import number and we have to assume that poor domestic demand has played a part. This means that pressure will rise on the government to do more to stimulate growth," he said.
The Australian dollar, sensitive to the economic fortunes of of China, its main export destination, touched a new 4-1/2 year low of $0.8288.
The disappointing Chinese and Japanese data contrasted sharply with Friday's US non-farm payrolls that showed employment in November surged by 321,000, easily topping forecasts for 230,000 new jobs.
The dollar was steady at 121.580 yen after touching a new seven-year high of 121.860. The dollar index hovered near a 5-1/2 year high of 89.467.
A bullish dollar worked against crude oil, with the stronger greenback making commodities denominated in the US currency less affordable for holders of other currencies.
US crude was down 77 cents at $65.07 a barrel, heading towards a five-year low of $63.72 struck a week ago, with a strong US jobs report doing little to lift the bearish mood.
Some commentators focused on the positives of cheaper oil.
"The good news is that the fall in crude oil prices will provide well over two-thirds of the world's consumers with a windfall gain, particularly, the US, North Asian and Indian consumer. It is of modest help to Europe as well," Sean Darby, chief global equity strategist at Jefferies, said in a note to clients.
"This windfall gain ought to boost global GDP by around 0.5 per cent for every US$20/barrel drop in oil prices (with a lag)."
The dollar stood tall against the euro, which languished near a two-year low of $1.2270.
The euro and yen are expected to remain on the defensive against the dollar indefinitely as the strong US jobs data further contrasted the divergent monetary policy paths of the Fed and its European and Japanese counterparts which are mired in underwhelming easing schemes.
While the Fed is seen to have moved a step nearer to hiking rates, the European Central Bank is under pressure to enhance its stimulus programme while the Bank of Japan remains far from reaching its inflation target.
Copyright: Thomson Reuters 2014