Markets rise as US jobs data ease rate pressure on Fed

Hong Kong – Equities rose Monday on hopes the Federal Reserve has come to the end of its interest rate hiking cycle following a positive US jobs report.

Confidence has been buoyed recently by a string of reports pointing to a softening of the labour market and signs the economy is slowing, indicating the US central bank’s monetary tightening is kicking in.

Adding to the upbeat mood was the hope that China will continue to unveil measures to boost its stuttering economy and beleaguered property sector.

While the 187,000 new jobs in August was more than forecast, the figures for the previous two months were revised significantly lower, while wage growth cooled.

The readings suggested the economy was not in danger of tipping into recession while at the same time slowing enough to justify not lifting borrowing costs any further — a so-called “Goldilocks” scenario.

“Fed chair (Jerome) Powell, or President (Joe) Biden for that matter, probably couldn’t have scripted a better August employment report if they’d tried,” said Ray Attrill at National Australian Bank.

“The Goldilocks metaphor is much used and abused in economic and financial circles, but in relation to the various ‘soft landing’ signals emanating from the report, on this occasion it does seem entirely appropriate.”

Michael Hewson at CMC Markets added: “From the Fed’s point of view this is exactly the type of report they would have wanted to see to justify keeping monetary policy unchanged this month.

“If that trend continues, and there’s no reason to suppose it won’t then it’s quite reasonable to assume that we could well have seen the last of Fed rate hikes for this economic cycle.”

After a broadly positive day on Wall Street, Asia enjoyed a healthy start to the week.

Hong Kong jumped more than two percent as investors played catch-up with Friday’s regional advance after being closed because of a typhoon.

Shanghai, Tokyo, Sydney, Seoul, Singapore, Mumbai, Taipei, Manila and Jakarta were also in the green.

London, Paris and Frankfurt rose at the open.

– China signals –

Investors are also keeping an eye on China, hoping for more measures to stimulate the economy after a number of announcements last week, including reducing mortgage down payments and tax incentives.

“While these individual easing measures may not appear substantial, their collective implementation clearly signals policymakers’ intentions to stabilise the property market, spur economic growth, and boost overall sentiment,” said SPI Asset Management’s Stephen Innes.

“Further targeted measures are anticipated to be incrementally introduced until policymakers are content with the achieved results.”

However, observers say that traders are yearning for the government to unveil a big-bang stimulus similar to the $550 billion seen in 2008 during the global financial crisis.

News that battered developer Country Garden had won approval from creditors to extend a deadline for a key bond repayment, narrowly avoiding a potential default, provided some much-needed relief from worries over China’s property sector.

– Key figures around 0715 GMT –

Tokyo – Nikkei 225: UP 0.7 percent at 32,939.18 (close)

Hong Kong – Hang Seng Index: UP 2.4 percent at 18,822.22 

Shanghai – Composite: UP 1.4 percent at 3,177.06 (close)

London – FTSE 100: UP 0.6 percent at 7,507.28

Dollar/yen: DOWN at 146.17 yen from 146.25 yen on Friday

Euro/dollar: UP at $1.0790 from $1.0777 

Pound/dollar: UP at $1.2613 from $1.2590

Euro/pound: DOWN at 85.55 pence from 85.58 pence

West Texas Intermediate: FLAT at $85.55 per barrel

Brent North Sea crude: FLAT at $88.52 per barrel

New York – Dow: UP 0.3 percent at 34,837.71 (close)