HONG KONG, June 4, 2018 (BSS/AFP) – Asian markets rallied Monday following
a forecast-busting US jobs report that reaffirmed the world’s top economy is
improving, while investors were also cheered by the formation of new
governments in Italy and Spain.
However, while the week has got off to a positive start, there are
lingering worries about a possible global trade war after the US hit Canada,
Mexico and the European Union with steel and aluminium tariffs.
Focus is turning to a Group of Seven summit in Quebec later in the week,
where Donald Trump is expected to go head-to-head with other world leaders
over the levies, while China has warned Washington off imposing any measures
against it.
The EU and Canada have filed complaints at the World Trade Organization,
while Treasury Secretary faced severe criticism at a G7 finance ministers’
gathering at the weekend.
All three main indexes on Wall Street ended sharply higher Friday after
data showed the US created more jobs than expected in May, while the
unemployment rate is at a near five-decade low. Separate figures showed US
factory activity also beat estimates.
The gains in New York filtered through to Asia, where Tokyo ended the
morning session 1.3 percent higher, while Hong Kong was also up 1.3 percent
and Shanghai added 0.3 percent.
Sydney rose 0.7 percent, Seoul gained 0.4 percent and Taipei put on more
than one percent.
The dollar also built on Friday’s surge against the yen as the strong jobs
report also lifted expectations for another interest rate hike by the Federal
Reserve next week.
The euro held its gains after Italy’s populist parties agreed to form a
government, ending days of uncertainty that had fuelled fears of another
election that would essentially be considered a referendum on its euro
future.
A change of government in Spain also provided some support to the single
currency, with the unpopular and corruption-plagued Mariano Rajoy replaced by
Socialist Pedro Sanchez.
However, Stephen Innes, head of Asia-Pacific trading at OANDA, said: “With
calm engulfing eurozone markets, the euro could find some relief over the
short term but indeed the wear and tear from the election crisis, and the
waves of populism gripping Europe, do point to some longer-term structural
issues for the single currency.”
– Key figures around 0300 GMT –
Tokyo – Nikkei 225: UP 1.3 percent at 22,457.01 (break)
Hong Kong – Hang Seng: UP 1.3 percent at 30,896.46
Shanghai – Composite: UP 0.3 percent at 3,083.69
Euro/dollar: UP at $1.1688 from $1.1659 at 2100 GMT on Friday
Pound/dollar: UP at $1.3374 from $1.3347
Dollar/yen: UP at 109.60 yen from 109.50 yen
Oil – West Texas Intermediate: UP five cents at $65.86 per barrel
Oil – Brent Crude: DOWN 11 cents at $76.68 per barrel
London – FTSE 100: UP 0.3 percent at 7,701.77 (close)
New York – Dow Jones: UP 0.9 percent at 24,635.21 (close)