BEIJING (AP) — Asian stocks rose Monday despite U.S.-Chinese trade tension following solid Wall Street gains on strong U.S. employment data.
KEEPING SCORE: The Shanghai Composite Index rose 0.8 percent to 3,332.59 and Tokyo’s Nikkei 225 surged 1.6 percent to 21,802.12. Hong Kong’s Hang Seng added 1.5 percent to 31,464.59 and Seoul’s Kospi advanced 1 percent to 2,486.11. Sydney’s S&P-ASX 200 added 0.7 percent to 6,004.90 and benchmarks in Taiwan, New Zealand and Southeast Asia also rose.
WALL STREET: Stocks gained after U.S. Labor Department data showed job creation in February stronger than forecast, while wage increases were below expectations. That helped to dampen inflation concerns that triggered the market’s swoon. The Standard & Poor’s 500 index climbed 1.7 percent to 2,786.57. The Dow Jones industrial average rose 1.8 percent to 25,335.74. The Nasdaq composite jumped 1.8 percent to 7,560.81.
TRADE WAR?: China’s commerce minister said Beijing wants to resolve disputes with Washington through negotiations but vowed to defend Chinese interests. Zhong Shan gave no indication Beijing planned to make good on earlier threats to retaliate following U.S. President Donald Trump’s decision to raise import duties on steel and aluminum. Anxiety in markets has been fueled by the departure of economic adviser Gary Cohn, an opponent of import controls. “The rise of trade hawks in the White House casts a dark shadow over trade in Asia,” said Mizuho Bank in a report.
ANALYST’S TAKE: “U.S. employment data hit a sweet spot on Friday night. Jobs surged but wage growth moderated, indicating an ideal higher growth, lower inflation scenario,” said Michael McCarthy of CMC Markets in a report. “Any initial enthusiasm may ease as investors digest further trade war rhetoric,” said McCarthy. “While the EU sought clarification on U.S. tariff exemptions, China’s trade minister warned ‘a trade war will only bring disaster … to the global economy.’ The trade fight picked by the US President appears increasingly focused on these two largest trading blocs.”
NORTH KOREA: U.S. officials said there will be no more conditions imposed on North Korea before a possible meeting of the two nations’ leaders beyond the North’s promise not to resume nuclear testing and missile flights or publicly criticize U.S.-South Korean military exercises. The comments followed the surprise announcement last week that President Donald Trump has agreed to meet the North’s Kim Jong Un by May. Treasury Secretary Steven Mnuchin said Trump would “sit down and see if he can cut a deal” over the North’s nuclear program. Some members of Congress worry Trump acted impulsively in agreeing to meet before negotiators set goals the leaders could agree to.
ENERGY: Benchmark U.S. crude rose 3 cents to $62.07 per barrel in electronic trading on the New York Mercantile Exchange. The contract jumped $1.92 on Friday to close at $62.04. Brent crude, used to price international oils, added 6 cents to $65.55 per barrel in London. It surged $1.88 the previous session to $65.49.
CURRENCY: The dollar weakened to 106.58 yen from Friday’s 106.81 yen. The euro rose to $1.2321 from $1.2306.
– Here are the top five things you need to know in financial markets on Monday, March 12:
1. Global Stocks Start The Week In Rally-Mode
Global stock markets got off to a strong start to the week, after the latest U.S. jobs report managed to impress with its strength while also easing fears of inflation and faster rate hikes, a neat feat that whetted risk appetites globally.
In Europe, most of the continent’s major bourses traded higher in mid-morning trade, with every sector trading in positive territory. The pan-European Stoxx 600 index, the region’s broadest measure of share prices, edged up 0.4%, poised for its sixth straight day of gains.
Meanwhile, on Wall Street, U.S. stock futures pushed higher, an indication that equities may be ready to pick up where they left off late last week.
There are no major earnings report on the docket for today, as fourth-quarter earnings season continues to wind down.
All three major U.S. stock indexes recorded gains of around 1.7% on Friday, with the tech-heavy Nasdaq hitting a fresh all-time high, following the ‘Goldilocks’ jobs report.
2. Dollar Loses Momentum, U.S. Bond Yields March Higher
The U.S. dollar slipped, losing some of its recent momentum, after the latest U.S. jobs report showed that job growth surged in February, recording its biggest increase in more than 1-1/2 years, but a slowdown in wage gains pointed to only a gradual increase in inflation.
That dampened expectations for four rate hikes by the Federal Reserve this year.
The dollar index, which gauges the U.S. currency against a basket of six major rivals, dipped 0.2% to 89.95. It hit its best level since March 1 at 90.36 on Friday.
Meanwhile, the U.S. 10-year Treasury yield ticked up to 2.91%, climbing back toward a four-year high of 2.957% reached last month.
Monday’s calendar features no major economic data releases. Instead, investors will look ahead to this week’s U.S. inflation and retail sales reports to gauge how it will impact the Fed’s view on monetary policy in the months ahead.
3. Oil Slips Ahead Of EIA Monthly Update On Shale Output
Oil prices edged lower, after soaring around 3% in the last session, as market players looked ahead to the U.S. Energy Information Administration’s (EIA) monthly update on shale-oil production levels due later in the day.
U.S. energy companies last week cut oil rigs for the first time in almost two months, with drillers cutting back four rigs, to 796, Baker Hughes energy services firm said on Friday.
Despite the lower rig count, which is an early indicator of future output, U.S. oil production, driven by shale extraction, rose to an all-time high of 10.37 million barrels per day (bpd) last week, staying above Saudi Arabia’s output levels and within reach of Russia, the world’s biggest crude producer.
4. Bitcoin Jumps Back Toward $10K-Level After Last Week’s Rout
Bitcoin prices rallied back towards the $10,000 mark, bouncing back after sliding 18% last week.
The world’s biggest virtual currency by market cap was up around 14% to $9,794.50, marking a gain of around $1,100.
Other major cryptocurrencies were also higher, with Ethereum, the world’s second largest cryptocurrency by market cap, rising about 7% to $736.09.
The third largest cryptocurrency Ripple advanced roughly 5% to trade at $0.82334.
5. Next Trump Economic Advisor?
President Donald Trump is strongly considering Christopher Liddell, a former executive at Microsoft (NASDAQ:MSFT) and General Motors (NYSE:GM), to succeed his departing top economic adviser, Gary Cohn, who quit last week after Trump decided to impose tariffs on steel and aluminum imports.
Liddell is currently the White House’s director of strategic initiatives and has worked closely with Jared Kushner, the president’s son-in-law and senior adviser, on efforts to streamline and update government functions.