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Jobs report boosts sentiment

Markets in Asia were upbeat on Monday, mirroring the positive sentiment in the US on Friday after the strong US employment report. The jump in yields after the report saw the dollar leap to leap a one week high against the Japanese yen, causing a rise in the Nikkei.

 

The dollar has begun the week off Friday’s highs with minimal US economic data on tap until CPI is released on Friday. Federal Reserve policymakers should have been given sufficient confidence in the US economy to begin balance sheet reduction in September. Still, doubt remains about how far interest rates can possibly go when weak wage growth keeps inflation low, and that should limit gains in the dollar.

 

Commodity prices have remained firm, despite Friday’s rebound in the greenback, which helped Australian mining stocks recover from three days of declines. Iron ore prices in China saw some of the biggest gains, raising questions whether the demand is a fleeting spell of hot money or as a result of more sustainable investment demand.

 

Stocks in Europe look set to open higher on Monday as sentiment remains firm after Friday’s US jobs report. After a strong second quarter thanks to some calming election results, European shares have underperformed of late in part because of the firmer euro. A weaker euro after the NFP data might go some way to spur some flows back into European equities.

 

 

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