Market Close Apr 05

US jobs numbers keep stocks higher

Thin trade amid public holidays still ekes out gains after blowout US non-farm payrolls print; oil falls 

by Mark McCord and Danny McCord
US jobs numbers keeps stocks higher
American jobless numbers fell in March, boosting investor sentiment. Photo: Reuters

(ATF) The blowout US non-farm payrolls data last week sent Asian shares higher Monday as investors bet a strengthening American economy will benefit global markets.

Japan's Nikkei rose 0.8% while MSCI's broadest index of Asia-Pacific shares outside Japan slipped slightly, with China and Hong Kong closed for Tomb-Sweeping day and Australia on Easter Monday. Much of Europe’s markets are also closed for Easter.

With holidays keeping business limited, trading was light, but the strong employment reading on Friday provided healthy support, while eyes turn to the upcoming earnings season.

Also on ATF

The US Labor Department said the world's top economy created more than 900,000 jobs in March, far more than expected and reinforcing the view that it is well on the recovery track after last year's virus-induced collapse.

"There will be further improvements in April, as restaurants have started to reopen. People have expected economic normalisation to take place sooner or later but its pace seems to be accelerating," said Koichi Fujishiro, senior economist at Dai-ichi Life Research.

More jobs

Meanwhile, upward revisions to figures in January and February meant 156,000 more jobs than previously flagged were created.

Tokyo, Seoul, Singapore and Manila were all in positive territory, though Jakarta and Bangkok fell.

And Mumbai sank more than two percent as India continues to struggle with surging virus infections, which have forced the government to impose limited lockdowns in Maharashtra state.

Focus now turns to Washington, where lawmakers are preparing to discuss Biden's $2.25 trillion infrastructure plan, which he has said will create millions of jobs for struggling Americans.

Talks on the package come as the White House's recently passed $1.9 trillion stimulus begins to filter through, with $1,400 cash handouts being delivered. 

Full employment

That and the prospect of a return to a full employment, in turn, is raising questions about whether the Fed can stick to its pledge that it will keep interest rates through 2023.

Markets have strong doubts, with Fed funds futures fully priced in one rate hike by the end of next year.

Many market players also expect the Fed to look into tapering its bond buying this year, even though Fed officials have said it has not discussed the issue yet.

"It will become impossible for the Fed to avoid discussing tapering by the autumn," said Kozo Koide, chief economist at Asset Management One, noting U.S. President Joe Biden's infrastructure spending plan is likely to be passed by then.

The two-year U.S. Treasury yield rose to 0.186%, near its eight-month peak of 0.194% touched in late February.

Yields on longer-dated bonds also rose, with 10-year notes at 1.725% in Asia on Monday, extending its rise that began on Friday after the job report.

Oil prices dropped, paring strong gains made in the previous session that was driven by the decision by OPEC+ to gradually ease some of its production cuts between May and July.

"Although the market rose initially on the news, it will be an output increase after all," said Tatsufumi Okoshi, senior commodity analyst at Nomura.

U.S. crude futures fell 1.4% to $60.62 per barrel while Brent fell 1.4% to $63.95.

  • Reporting by AFP and Reuters

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