Asian equities climbed with European stock index futures and copper after U.S. jobs data burnished sentiment toward the world’s largest economy. Thailand’s shares and currency gained after voters backed a new constitution, while South Korean assets were buoyed by a debt-rating upgrade.
The MSCI Asia Pacific Index rose to a one-year high, led by Japanese shares as the dollar extended its advance against the yen following the bigger-than-estimated increase in American payrolls reported Friday. The baht was Asia’s best-performing currency, while the won swung to a gain after S&P Global Ratings raised South Korea’s credit ranking. Crude traded near $42 a barrel amid a pickup in U.S. drilling and copper rebounded from a four-week low. Sovereign debt fell in Australia and Japan after a retreat in U.S. Treasuries.
U.S. data showing improvements in employment, retail sales and factory output have bolstered confidence that the world’s biggest economy can withstand faltering growth elsewhere, reviving speculation that the Federal Reserve will raise interest rates this year. China’s exports and imports dropped last month in dollar terms, while Germany’s industrial output increased in June, reports showed Monday.
“A possible pullback in U.S. jobs figures had kept some on guard, and the latest data have quenched those concerns,” said Hitoshi Asaoka, a senior strategist with Mizuho Trust & Banking Co. “It does leave room for a rate increase within this year."
Odds on the Fed increasing rates by the end of this year rose to 47 percent in the futures market after the U.S. jobs report, up from 37 percent on Thursday. Exports from China, the world’s biggest trading nation, declined 4.4 percent from a year earlier in July and its imports dropped 12.5 percent. Industrial production in Germany, Europe’s largest economy, rose 0.8 percent in June from the previous month.
The MSCI Asia Pacific Index added 1.3 percent as of 7:10 a.m. London time. Japan’s Topix index jumped 2 percent, after sliding 3.2 percent last week. Hong Kong’s benchmark was headed for its best close since December, while gauges in Indonesia, Taiwan and Thailand climbed to their highest levels in more than a year.
Futures on the Euro Stoxx 50 Index added 0.3 percent, while contracts on the S&P 500 Index were little changed after the U.S. gauge climbed 0.9 percent in the last session to an all-time high. With more than three-quarters of the American benchmark’s members having released quarterly results so far, 78 percent have beaten analysts’ profit estimates.
The yen weakened 0.2 percent to 102.04 per dollar, after sinking 0.6 percent on Friday, and New Zealand’s dollar lost 0.4 percent. All of the 16 economists surveyed by Bloomberg predict the Reserve Bank of New Zealand will cut its benchmark interest rate to a record at a review this Thursday.
The baht climbed 0.4 percent after voters approved a military-backed constitution, putting the nation on track for elections next year. The won advanced 0.2 percent, having recovered from a loss of as much as 0.6 percent after S&P raised South Korea to AA, its third-highest rating.
The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, held near a one-week high. U.S. payrolls increased by 255,000 workers last month, following a 292,000 gain in June that was larger than previously estimated. Hedge funds and other large speculators boosted bullish dollar bets to the most since February last week, even before the payrolls report.
Copper rose 0.7 percent in London, aluminum climbed to a three-week high and nickel was headed for its strongest close in a year.
Gold was little changed, after dropping 1.9 percent to a one-week low on Friday. The growing prospect of a Fed rate hike dims the appeal of the precious metal versus yield-paying assets.
“Gold was the big casualty from the strong jobs data,” analysts at Australia & New Zealand Banking Group Ltd. wrote in a note. “The case for a Fed hike was bolstered, but the market is not getting too gung-ho.”
West Texas Intermediate crude rose 0.4 percent to $41.99 a barrel after falling 0.3 percent in the last session. Rigs targeting crude in the U.S. increased by seven to 381 last week, the highest level since March, Baker Hughes Inc. said Friday.
Soybeans climbed as much as 1.5 percent in Chicago amid strong demand for U.S. exports. China’s soybean imports rose to 7.76 million metric tons in July from 7.56 million tons in June, data showed Monday. Wheat for September also advanced as much as 1.5 percent amid concern about the outlook for European crops.
Australian bonds led losses in the Asia-Pacific region, with 10-year yields increasing by eight basis points to 1.96 percent. Rates on similar-maturity Japanese and New Zealand debt rose by at least four basis points.
The yield on Treasuries due in a decade was little changed at 1.59 percent, having increased by nine basis points on Friday. That compares with the all-time low of 1.32 percent reached last month.
“The economic situation is not so gloomy,” said Park Sungjin, the head of principal investment in Seoul at Mirae Asset Securities Co., which oversees $8 billion. “We have seen the bottom in Treasury yield levels,” he said, predicting the 10-year yield will be above 1.90 percent by the end of December.
South Korea’s 10-year yield increased by four basis points to 1.43 percent. It climbed as high as 1.44 percent prior to S&P’s debt-rating upgrade and went as low as 1.40 percent within 20 minutes of the announcement.